Chamberlin, the specialist castings and engineering group, says trading in the first half of the financial year has been in line with management expectations.
It days the company's investment in a new machining facility in Walsall is progressing well and is expected to generate incremental sales from January. A trading statement says: "Demand at the company's foundry in Leicester, which produces mid-size castings, continues to be subdued and while the cost base has been reduced to ensure a lower breakeven point, as previously reported, the management has taken the difficult decision to cease production.
"Accordingly, an orderly wind-down is now commencing and should conclude by the end of 2016. The closure of the foundry is not expected to impact existing market forecasts for underlying profit before tax for the current financial year."
As in prior years, Chamberlin's performance is expected to be weighted towards the second half. In the financial year to 31 March 2016, the Leicester foundry contributed sales of £5.9m and an underlying profit before tax of £420,000.
In the first half of the current financial year, Leicester contributed sales of approximately £1.8m and an underlying profit before tax of approximately £46,000.
The statement says: "Management continues to view prospects for improved performance positively, helped by the increase in opportunities available as a result of the new machining capability as well as growth at Exidor, which produces architectural ironmongery, and Petrel, which designs and supplies specialist lighting.
"In addition, as net exporters of UK manufactured products, all Chamberlin's operations should benefit from the current weak sterling, with the financial impact more evident in the next financial year as the Company's pre-Brexit currency hedges unwind." The company expects to publish interim results on 29 November 2016.