TIDMCMH
RNS Number : 7676R
Chamberlin PLC
08 July 2022
8 July 2022
Chamberlin plc
("Chamberlin", the "Company" or the "Group")
Full Year Trading Update and Notice of Results
Chamberlin plc (AIM: CMH.L), the specialist castings and
engineering group, is pleased to announce the following trading
update for the financial year ended 31 May 2022 ("FY 2022").
Key Points
-- FY 2022 Group operational performance significantly improved
compared to the prior period, delivering a 112% increase in
adjusted EBITDA and a full year profit after tax for the first time
in five years (subject to audit)
-- The Group expects to report record levels of revenue and
operating profit growth at Petrel Ltd and Russell Ductile Castings
Ltd, following a very strong recovery and high demand in the
post-pandemic markets
-- Slower than anticipated recovery at Chamberlin & Hill
Castings Ltd in Walsall which continues to operate at a loss
-- The Group's deficit in shareholders' funds is expected to
largely be eliminated (subject to audit) for FY 2022 as a result of
the restructuring actions taken by the Company, a reduction in the
pension deficit and improved performance across the Group
FY 2022 Trading Performance
The Group expects to report revenues for FY 2022 of
approximately GBP16.5 million (14 months ended 31 May 2021: GBP22.7
million), in line with market expectations and adjusted EBITDA* of
GBP0.2 million, up 112% on the prior period (14 months ended 31 May
2021: GBP1.7 million loss). The Company also expects to report a
profit after tax of GBP0.1 million (subject to audit), in line with
market expectations.
Chamberlin & Hill Castings Ltd - Casting Facility and
Machining Facility ("CHC")
Following the placing completed in February 2022, the Board has
continued to implement the revised strategy in order to reduce sole
reliance on the automotive industry, diversify the Group's customer
base and pursue more attractive markets.
In relation to the Group's automotive products, well publicised
global economic conditions such as inflation, escalating raw
material costs, supply chain shortages and a slowdown in the
automotive industry remain challenges to trading conditions. As a
result, management continue to reduce costs, improve efficiencies,
and optimise pricing at CHC in order to improve margins and restore
sustainable profitability to the Group, however the division
continues to operate at a loss and is not yet cash generative.
Longer term demand for the Group's automotive products is however
expected to improve in H1 FY 2023 and the Group has been successful
in winning new contracts in the niche supercar market and the
commercial vehicle sector.
The Group, as the sole UK based foundry manufacturer and
distributor of UK made cast iron cookware, launched its Emba range
at the end of November 2021, which continues to be very well
received by consumers. The Group has utilised targeted marketing to
businesses, subsequently entering into a number of small
distribution deals, with traditional and digital retailers, for the
Emba products, as well as focusing on more penetrative marketing
strategies for sales direct to consumers including advertising
through social media platforms, such as Instagram.
The Board was very encouraged by the rapid increase in sales,
new leads and social media followers in the final quarter of FY
2022. With the in-house capability to design, manufacture and
distribute new products into a global marketplace, the Board firmly
believe that further development and investment in Emba cookware
will position the brand to be a material contributor to growth over
the coming months and years.
The Iron Foundry Weights ("IFW") brand was launched in May 2021
and the Board remains focused on direct selling to the consumer,
where the Group can offer high-quality, bespoke UK made products
that have a significantly reduced carbon footprint compared to
products imported from overseas. Chamberlin has the existing
capability to not only design and manufacture cast iron fitness
products but is also actively investing in repurposing its
state-of-the-art machining facility to be able to produce its new
range of steel precision machined dumbbells.
Driven by the exciting progress of the consumer products brands
and the feedback from consumers, Chamberlin has designed a number
of new premium products to support the existing Emba and IFW
offerings and plans to launch these products in FY 2023. Chamberlin
has recently installed a new shotblast system at CHC to support the
growth plans and ensure that it provides premium quality,
competitively priced products.
Russell Ductile Castings Ltd ("RDC")
The Company's Scunthorpe foundry operation continues to operate
at near full production levels in response to both a growing
customer demand and pipeline of opportunities, with the current
order book at sufficient levels to ensure H1 2023 management sales
forecasts are met. Operating profitability at RDC significantly
improved during FY 2022, with the Board expecting to report an
increase of over 300 per cent. compared to the prior 14-month
period. With planning permission expected in Summer 2022, the
investment programme to expand production capacity by up to 40 per
cent. and the types of product that can be manufactured at RDC's
facilities to exploit new growth opportunities, including in the
offshore and green energy generation markets, is expected to be
completed in Autumn 2022.
Petrel Ltd
Petrel, Chamberlin's specialist lighting business, traded
profitably during FY 2022 and has exceeded the Board's expectations
significantly. The Company expects to report an increase in
operating profitability of over 150 per cent. compared to the prior
14-month period. Petrel continues to benefit from a strong order
book, reflecting recovery from COVID-19 and Brexit. Petrel is
developing a pipeline of new and innovative products that can be
brought to market swiftly and potentially move Petrel into a market
leading position. Management are also investigating the provision
of additional services (such as warranty, inspection and
maintenance) to its customers that have a significant installed
base of Petrel products. In addition, management continue to review
and update Petrel's existing product range through in-house design
and manufacture of new products as new technology evolves.
Balance Sheet and Financing
In May 2022, the Group refinanced the terms of its asset finance
facility with HSBC, extending the repayment period to October 2025
at an interest rate of 6.5 per cent.
On 5 May 2022, the Company announced details of a sale and
leaseback of its freehold property at RDC with completion of the
transaction occurring on 6 May 2022. The proceeds have been used to
reduce the Company's pension fund deficit by GBP600k in
satisfaction of the Chamberlin & Hill Life Assurance Scheme's
charge over the property, with the balance of the proceeds being
applied to the Group's growth strategies and to provide working
capital.
Net debt at 31 May 2022, including asset leases of GBP2.7
million (31 May 2021: GBP2.2 million), was GBP4.9 million
(unaudited) (31 May 2021: GBP1.8 million) and current cash headroom
is in line with management expectations at GBP0.8 million. The
Board expects the Group's deficit in shareholder's funds on the
balance sheet to be largely eliminated for FY 2022 (subject to
audit), as a result of the restructuring actions taken by the
Company, a reduction in the pension deficit and improved
performance across the Group.
Outlook
Whilst the overall economic climate remains uncertain, in
particular rising inflation impacting consumer spending, the Board
is pleased to report that all three operating divisions have made a
strong start to FY2023 with higher than expected levels of orders
for Q1 2023 and strong ongoing order books.
The Group is well positioned to continue its recovery and
expects to return to a more sustainable level of profitability,
having taken the appropriate steps to reduce its cost base and
invest in new growth strategies for each business.
This recovery is further supported by the Group's protection
from any current or medium term energy price increases, having
secured a 5 year fixed price contract for electricity in March
2020, placing the Group in an increasingly competitive position to
win new orders.
Notice of Results
The Group expects to report its audited results for the
financial year ended 31 May 2022 in September 2022.
* adjusted EBITDA defined as operating profit before interest,
taxation, depreciation, amortisation and non-underlying items
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018.
Enquiries:
Chamberlin plc T: 01922 707100
Kevin Price, Chief Executive
Alan Tomlinson, Finance Director
Cenkos Securities plc T: 020 7397 8900
(Nominated Adviser and Joint Broker)
Katy Birkin
Stephen Keys
Peterhouse Capital Limited T: 020 7469 0930
(Joint Broker)
Lucy Williams
Duncan Vasey
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