Walsall engineering group Castings sees profits hit by troubled machining business
Profits at Brownhills engineering group Castings have been dragged down by problems at its machining arm, the company revealed today.
CNC Machining, which sits across the Lichfield Road opposite Castings' main foundry site, slumped to a £3.95 million loss as it pulled out of some projects and racked up a £1.2m bill for transport costs so it could meet customer deadlines.
Despite a stronger year for Casting's foundries at Brownhills and at the William Lee site in Derbyshire, the group's pre-tax profits dropped to £12.1 million from £15.9 million a year ago.
Brian Cooke, chairman of the group which employs around 400 people across its sites, said the troubled CNC Speedwell machining business had been brought back under control.
CNC managing director Mark Lewis resigned during the year and the group recruited new general manager Steve Barwell as well as a new technical director, quality director and financial controller.
Mr Cooke said: "It is very disappointing to report a substantial loss at CNC for the year.
"One of the major issues for much of the year has been an inability to meet customer orders in a timely way, which has resulted in extra transport costs in excess of £1.2m. These costs have been necessary to prevent disruption to our customers' production lines. I am pleased to be able to report that transport costs are now back down to historic levels.
"We have also carried out a review of the operations of the company and, as a result, identified certain projects that were not suitable for the group. This has cost us a further £1m in write-downs of capital and tooling equipment."
He added: "It will take time before we see the turnaround from the changes being implemented by the new team, including the training of operatives that we have taken on, but we expect the trading results of CNC to improve during the second half of this financial year."
On the bright side, the company's foundries had seen an increase in output and improved profitability, partly due to investment in robotic handling.
Looking ahead, Mr Cooke said: "It appears at the present time our order book is sound and schedules are increasing. In particular demand for commercial vehicles is currently strong and it is hoped this trend will continue."
Foundry output of its castings was up 4.2 per cent to 49,200 tonnes, helping boost group revenues which were up 12.2 per cent to £133.3 million, compared to £118.8m a year ago, with 73 per cent going for exports.