Chamberlin plc (LON:CMH) released a trading update on Tuesday for the financial year to 31 March 2019, outlining a first-half operating loss. The specialist castings and engineering group has implemented various cost reduction measures as a result of the changing trading conditions and Brexit uncertainty. Shares in the company dropped by over 9% during early trading on Tuesday morning.
Underlying operating loss (before exceptional items and legacy pension costs) of the continuing operations during the year to 31 March was £0.3 million. The company’s operating loss for the first-half of the year (the six months to 30 September 2018) was also reported as £0.3 million.
However, the company has said the sale of Exidor for £10 million has strengthened its balance sheet. It has also underlined that the sale has significantly reduced its pension liability. Following a one-off contribution of £2.5 million from the cash proceeds from the sale of Exidor, Chamberlin’s adjusted reported pension liability was £1.5 million as of 30 September 2018.
Chamberlin has warned of the “toughened” trading conditions.
Despite its strengthened financial position, trading conditions have toughened. “Customer schedules for the European turbocharger market have suffered significant reductions, partly related to the disturbance to production schedules resulting from the new WLTP (Worldwide Harmonised Light Vehicle Test Procedure) emissions testing regime,” the company said. Moreover, the uncertainties surrounding Brexit have exacerbated the uncertain trading climate, with the petrol business experiencing a slowdown.
As a result of the changing trading conditions, the company has said that the board has implemented various cost reduction measures. Additionally, the board has completed a reassessment of the likely outcomes during the second half of Chamberlin’s current financial year. It expects the loss in the second-half will be similar to the figure during the first-half.
In order to see the benefits of the company’s cost reduction measures, it will have to wait until the next financial year to 31 March 2020.
Elsewhere on the stock market Tuesday morning, Carpetright performance has followed expectations amid “volatile” trading patterns. Additionally, Ocado’s full-year losses widened to £44.9 million and BP’s full-year profits more than double.
At 08:43 GMT today, shares in Chamberlin plc (LON:CMH) were trading at -9.26%.