Castings to take hit from project write-downs

Castings said the performance of the foundry businesses continues to be in line with market expectations supported by steady demand from its commercial vehicle customer base.

Castings said that following the change of management and completion of the review of the machining operation, certain projects had been identified that were not considered suitable for the group.

It said the total cost of exiting these projects was £1.3m which comprised write-downs of specific capital and tooling equipment and exiting contract commitments to purchase equipment.

It said that in addition to these project specific items, the continued disruption in supply had resulted in higher than previously anticipated costs, particularly in relation to excessive transport, to ensure customer schedules were met.

It said the total financial impact in 2017-18 of the reorganisation of the machining business was expected to be a non-recurring cost of £3.4m, including £1.2m of excessive transport costs.

It said that after taking into account these costs, the directors expect the group profit for the year to be in the range of £12.5m-£13.5m, with positive cash flows being generated. The group also announced that Steve Barwell, following an interim period, had been appointed general manager and director of CNC Speedwell Limited.

It said two further additions to the management team had been recruited and would join by the end of March.

At 9:10am: (LON:CGS) Castings PLC share price was 0p at 450.5p