TIDMCMH
RNS Number : 9921H
Chamberlin PLC
30 November 2022
30 November 2022
Chamberlin plc
("Chamberlin", the "Company" or the "Group")
AGM Statement and Trading Update
Chamberlin plc (AIM: CMH.L), the specialist castings and
engineering group, announces that at the Company's Annual General
Meeting this morning, Kevin Price, Chief Executive, will make the
following statement regarding trading in the first half of the
financial year ("H1 2023").
"I am pleased to report that trading across all of Chamberlin's
businesses is in line with expectations in the first half of the
financial year, as we continue to implement our strategy and build
on the improved operational and financial performance achieved in
the previous financial year. Despite orders and operational
performance at Russell Ductile Castings and Petrel remaining
buoyant, the Group's profitability in H1 2023 has been held back by
a slower recovery at Chamberlin & Hill Castings ("CHC"). We
have continued to take the necessary corrective actions in H1 2023
at CHC to improve its performance through cost savings and margin
enhancement initiatives, with this business now entering H2 2023 at
a broadly break-even position on a monthly basis. These actions,
together with the profit contributions expected from the contract
wins discussed below, give the Board confidence that CHC will
deliver a strong, profitable performance in H2 2023 and enable the
Group to meet market expectations for the year ending 31 May
2023.
Chamberlin & Hill Castings ("CHC")
Despite the uneven demand in automotive volumes in H1 2023 that
has held back its performance, CHC has been successful in its
strategy of diversification away from the automotive sector having
secured a number of new orders in the last two months with a
potential aggregate annualised revenue value of approximately
GBP1.2m, in the construction, cast iron radiator and commercial
vehicle markets. Production is expected to commence on all of these
programmes by the end of the first quarter of the 2023 calendar
year. A significant proportion of these new orders are the result
of the concerted efforts of customers to source from local UK
supply chains and CHC has the excess capacity and technical
expertise to be able to benefit further from this trend.
In addition, CHC, through its Emba cookware brand, has entered
into an agreement with a well-established cookware company to
develop, market and sell, a jointly branded cookware range, through
their substantial existing network of distributors and retailers.
The product range is currently in development and is expected to be
available for retail sale towards the end of March 2023. This
arrangement is a promising and exciting development for the Group's
Emba brand, providing access to a much wider customer base than
could have been established with the Group's in-house resources and
supporting the potential for Emba to become a more meaningful
contributor to CHC's diversification strategy.
CHC's machining facility has also won a number of recent new
orders that will see production ramp up over the next three months
as these programmes gather momentum. These orders are expected to
have an aggregate annualised revenue value of around GBP1.0m and
will enable five out of the six machining cells to be fully
occupied on a single shift basis for the first time in nearly two
years by the end of March 2023.
These new contracts, in addition to a currently break-even
trading position, provide CHC with the opportunity to deliver a
strong end to the current financial year and ensure that it is well
placed to make further progress in FY 2024.
Russell Ductile Castings ("RDC")
RDC has continued to perform well in H1 2023 and the Board is
pleased to report that order intake and financial performance have
continued to demonstrate resilience and consistency. RDC's order
book has remained stable at around GBP4m throughout H1 2023 and
remains on track to deliver to the Board's expectations for this
financial year. Notably in the first half, RDC was successful in
securing a significant contract in the renewable energy sector,
which is a target market for RDC's future growth strategy.
The positive outlook for RDC is now also supported by the
completion of the capacity expansion project in November 2022 that
has increased RDC's ability to produce large castings over three
tons by around 30%, providing the means to reduce customer
lead-times and take advantage of its buoyant enquiry pipeline from
new and existing customers. This investment demonstrates the
Board's belief that RDC can continue to capitalise on its market
leading position in the UK for the manufacture of specialist and
highly technical large cast iron products.
Petrel
Petrel has made a positive contribution to the Group's results
in H1 2023, at a run rate consistent with the previous financial
year and delivering operating profit averaging around 17% of
revenue. Order intake has remained elevated, enabling the order
book to be maintained at a consistently healthy level. This
includes a substantial order in the defence sector to supply
lighting to a branch of His Majesty's Armed Forces.
Petrel has a significant opportunity to release its untapped
potential and to increase its market share, having already earned a
solid reputation with its existing product range and in-house
capability to develop its products further and enter new markets.
With this in mind, the Board has installed a new management team at
Petrel in the first half, with the industry knowledge, vision and
experience to exploit Petrel's true potential. As a result of this
change, there will be an exceptional restructuring charge of
approximately GBP0.1m in the income statement in the first half
(unaudited). The Board continues to strongly believe that the Group
being in control of its own destiny, through the ability to design,
manufacture and market its own products is an important part of the
Group's future strategy and Petrel's unique ability to be flexible
and react quickly to customer needs means that it is well placed to
be a material contributor to Group performance going forward.
Outlook
The green shoots of recovery that were evident from the Group's
financial performance in the previous financial year, have
continued into H1 2023. Although profitability will be second-half
weighted due to the further efforts required to improve the
performance of CHC in H1 2023, these actions have had the desired
effect and give the Board the confidence that the Group will meet
full year market expectations for the year ending 31 May 2023
should current market conditions remain unchanged. The Board,
however, remains mindful of the demand on working capital that the
expected growth in revenue in the second half from new orders at
CHC and the capacity expansion at RDC will create, and continues to
evaluate opportunities to strengthen the balance sheet, including
in relation to the Group's property assets, in order to deliver on
the Group's growth objectives."
Certain of the information contained within this announcement is
deemed by the Company to constitute inside information as
stipulated under the UK version of the EU Market Abuse Regulation
(2014/596) which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018, as amended and supplemented from time to
time.
Enquiries:
Chamberlin plc T: 01922 707100
Kevin Price, Chief Executive
Alan Tomlinson, Finance Director
Cenkos Securities plc (Nominated Adviser T: 020 7397 8900
and Broker)
Katy Birkin
Stephen Keys
George Lawson
Peterhouse Capital Limited (Joint Broker) T: 020 7469 0930
Lucy Williams
Duncan Vasey
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END
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November 30, 2022 02:00 ET (07:00 GMT)
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