Chamberlin interim results disappoint but auto contracts offer hope

Industrial castings and engineering group Chamberlin delivered disappointing interim results that reflected weak demand from industrial markets and a sharp depreciation in the euro, meaning profits for the full year will be short of last year's.

Revenues of £18m in the six months to 30 September were down 14% on the same period last year due to the euro's slump and subdued demand from steel, oil and gas, and mining sectors.

Sales from AIM-listed Chamberlin's three foundries fell 17% to £13.3m, with about of a quarter of this being down to unfavourable movements of the euro against sterling.

Underlying profit before tax of £0.1m was down from £0.4m last time, £0.6m of which was an impact from the euro, while on the reported level the company made a loss before tax of £0.4m compared to an equivalent profit of £0.3m this time last year.

"Looking ahead, given the current tough trading environment, the board expects underlying profitability for the current financial year to be below the £0.8m achieved in the prior financial year," said chairman Keith Butler-Wheelhouse.

However, management anticipate the profit outlook for the next financial year to 31 March 2017 will recover, with the major automotive contract wins at Walsall expected to enter into production in 2016, while self-help measure begin to come through.

"The measures we have taken to achieve cost efficiencies and improve processes also leave the group better positioned for profitable revenue growth," the chairman added.

Analysts at Panmure Gordon said the result was as expected. Looking further ahead, Panmure expects PBT to grow by 65% in 2017 as the automotive contracts announced in late 2014 begin shipping in calendar 2016 and self-help measures drop to the bottom line.