LONDON (Alliance News) - Chamberlin PLC Tuesday suspended its interim dividend after reporting that it swung to loss and a cash outflow in the first half of its financial year as difficult trading in its foundry business pushed revenues down 14%.
The company said that based on current performance, it thinks the loss in the second half will be smaller than in the first half, while its new executive team are setting out to cut costs to meet the lower levels of revenue.
It said it Walsall foundry, which produces high-volume light castings, notably for diesel turbo chargers, was proving resilient, but demand for medium and heavy castings at its Scunthorpe and Leicester foundries was down.
Chamberlin reported a pretax loss of GBP1.2 million for the six months to end-September compared with a profit of GBP786,000 a year earlier, as revenue declined to GBP19.5 million from GBP22.6 million. It reported a net cash outflow from operations of GBP336,000, compared with cash generation of GBP1.5 million a year earlier. Net debt grew to GBP2.3 million, from GBP887,000.
"We appointed a new executive team in September which is focused on rationalising cost and formulating a strategic growth plan. In addition, the new executive team is currently reviewing the management capability with a view to reorganising and strengthening the team where appropriate. The teams at each site are now focused on reducing costs in line with lower levels of revenue to ensure improved financial performance," Chairman Keith Butler-Wheelhouse said in a statement.
It said investment in new products was driving the operational improvement.
"Our drive to develop new business (at the Scunthorpe heavy castings foundry) is yielding some positive results and we have been successful in developing and launching new products. New product revenues for the six months to 30 September 2013 accounted for 27.7% of Scunthorpe revenues, compared with 0.2% in the same period of 2012," the company said.
Chamberlin shares were down 7% at 80 pence Thursday afternoon.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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