Castings Public Limited Company · LSE:CGS
Castings Public — Castings — H1 FY2024 Earnings Presentation
29 slides from Castings Public's earnings presentation, Sep 30, 2023
Slide 1: Castings PLC Interim results
Castings PLC Interim results 30 September 2023 1
Slide 2: 1. Introduction and overview
1. Introduction and overview www.castings.plc.uk 2
Slide 3: Timeline
Timeline 1835 Foundry production commences in Walsall 1907 Castings Limited incorporated 1957 Move to current Brownhills location 1960 Floated on Birmingham stock market 1991 Foundry capacity increased through acquisition of William Lee Limited 1996 Machining started in group through acquisition of
Slide 4: The Castings group
The Castings group Foundry | Brownhills Foundry | Dronfield Machinist | Brownhills Founded 1835 Acquired 1991 Acquired 1996 30,000 tonnes capacity* 40,000 tonnes capacity* Over 100 CNC machines 389 employees 459 employees 374 employees * production capacity which, after machining, converts to a sale
Slide 5: Revenue profile
Revenue profile Revenue by sector Revenue by location 0.5% 14% 7.4% UK 13.6% Heavy truck 6% Europe Automotive North & South America 80% 78.5% Other Rest of world www.castings.plc.uk 5
Slide 6: Our customers
Our customers Other 14% Auto 6% Commercial vehicle 80% www.castings.plc.uk 6
Slide 7: Heavy truck registrations
Heavy truck registrations European heavy truck registrations (calendar year) 400,000 350,000 300,000 Units registered 250,000 Volvo estimate – 340,000 Volvo estimate – 290,000 Volvo estimate Volvo estimate 200,000 150,000 100,000 50,000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2
Slide 8: 2. Performance review
2. Performance review www.castings.plc.uk 8
Slide 9: Financial headlines
Financial headlines Results • Despatch weight up 1.6% to 25,500 tonnes • Revenue up 30% to £111m • Underlying revenue growth of 11% excluding energy related surcharges • Operating profit up 30.7% to £9.6m • Strong balance sheet with cash of £31.3m, pension surplus and no debt Dividends • Supplementa
Slide 10: Operational highlights
Operational highlights • Unprecedented level of demand in commercial vehicle sector • Strong demand in US • Growth in wind energy, trailer braking and trailer coupling sectors • Demand exceeding foundry capacity • Growth in sales tonnes (1.6%) • Mix of machined work at record high (62.1% by weight)
Slide 11: 3. Financial review
3. Financial review www.castings.plc.uk 11
Slide 12: Interim results overview
Interim results overview £m (unless stated) FY20 H1 FY21 H12 FY22 H1 FY23 H1 FY24 H1 Growth Revenue 73.1 41.7 69.7 85.6 111.3 30.1% Operating profit1 7.2 (1.3) 5.4 7.3 9.6 31.5% Operating margin1 9.9% -3.2% 7.7% 8.6% 8.6% - Operating margin adjusted for electricity 9.9% -3.2% 7.7% 8.6% 10.1% - Profi
Slide 13: Operating profit per tonne sold
Operating profit per tonne sold £389 £377 400 350 300 250 200 150 100 50 0 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24H1 www.castings.plc.uk 13
Slide 14: Summary cash flow statement
Summary cash flow statement £m FY20 H1 FY21 H1 FY22 H1 FY23 H1 FY24 H1 PBT net of tax payments 3.7 (1.4) 4.0 6.0 8.7 Depreciation 4.2 4.3 4.1 4.0 3.9 Working capital movement 3.3 6.0 (0.9) (3.7) 1.4 Capex (net) (3.7) (2.6) (2.4) (3.4) (4.8) Sale of property - 1.9 - - - Free cash flow (excluding pens
Slide 15: Dividend growth record
Dividend growth record Ordinary dividend declared per share 16.00 9.3% 10% 9% 14.00 7.5% 8% 12.00 6.9% 6.4% 7% Pence per share 10.00 6% 5.0% 5.0% 5.0% 4.7% 4.7% 4.7% 8.00 4.3% 5% 4.3% 3.8% 6.00 3.5% 4% 2.9% 3.1% 2.7% 2.6% 3% 4.00 1.9% 1.9% 2% 2.00 0.7% 1% 0.0% 0.0% 0.00 0% 2001 2003 2005 2007 2009 2
Slide 16: Foundry segmental results
Foundry segmental results £m (unless stated) FY20 H1 FY21 H1 FY22 H1 FY23 H1 FY24 H1 Growth Revenue Gross 79.7 44.6 75.6 95.0 124.9 31.5% Less: inter-group revenue (9.6) (4.1) (7.5) (10.3) (14.3) 38.8% External revenue 70.1 40.5 68.1 84.7 110.6 30.6% Foundry sales weight (tonnes) 25,200 14,350 24,30
Slide 17: Machining segmental results
Machining segmental results £m (unless stated) FY20 H1 FY21 H1 FY22 H1 FY23 H1 FY24 H1 Growth Revenue Gross 13.3 6.0 11.0 10.7 18.2 70.2% Less: inter-group revenue (10.3) (4.8) (9.4) (9.8) (17.4) 78.5% External revenue 3.0 1.2 1.6 0.9 0.8 -17.0% Segmental result 0.1 (2.1) 0.05 (0.5) 1.9 - Segmental
Slide 18: 4. Sustainability and outlook
4. Sustainability and outlook www.castings.plc.uk 18
Slide 19: Sustainability
Sustainability • Castings plc is a recycler • Overall tCO2e per tonne of castings produced reduced to 0.528 (from 0.547) in FY23 • Electric melting only, unlike a number of competitors • Electricity (scope 2) - 87% of our total energy kWh in FY23 • 100% REGO backed supply • Nil emissions using marke
Slide 20: H2 outlook
H2 outlook • High build rates for heavy trucks continues • Outsourcing of production – improving foundry operational efficiency • US opportunities • Other sector contribution and opportunities • Input cost stability • Skilled recruitment progressing • New plant production commencing • Delivery of fi
Slide 21: In summary
In summary Driving production efficiencies and margins Investment for Investment productivity Ramp-up on new customer platforms Debt free Opportunities Strong Next generation trucks balance sheet Value add in house – reduce supply chain miles Progressive Agile dividend policy US market – growing cus
Slide 22: Appendix - Additional information
Appendix - Additional information www.castings.plc.uk 22
Slide 23: Revenue and PBIT
£’m 100 120 140 0 20 40 £’m 100 120 180140 20 60 40 80 60 80 100 150 160 200 200160250 0 0 50 1990 1990 19911990 1991 19921991 1992 19931992 1993 19941993 1994 19951994 * market consensus figures for 2023 1995 19961995 1996 19971996 1997 19981997 1998 1998 1999 1999 1999 2000 2000 2000 2001 Revenue
Slide 24: Track record of strong cash generation
Track record of strong cash generation 40 Wm Lee CNC 35 30 25 20 15 10 5 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Dividend (supplementary) Net capex Pension contribution
Slide 25: Strategy
Strategy Deliver long term sustainable revenues and higher average margins through the following strategic priorities: Reinvestment for innovation and efficiency Increase OEM market share • Innovative design processes • Collaborative, dedicated customer teams • Reinvestment in automation • Increase
Slide 26: Business Model
Business Model Design collaboration & our people Value for stakeholders • Experienced teams • Technical knowledge Customers • Close customer relationships • Flexibility, cost-effective, quality • Latest design simulation • Capability for diverse range • Long term security Foundry production • High v
Slide 27: Commercial vehicle customer revenue mix
Commercial vehicle customer revenue mix 2011 2016 2018 2019 2020 2021 2022 2023 Customer A 23% 25% 30% 29% 28% 28% 23% 25% B 11% 13% 13% 13% 13% 14% 15% 15% C 1% 4% 8% 10% 9% 10% 12% 11% D 10% 9% 10% 10% 9% 7% 7% 9% Total 45% 51% 61% 62% 59% 59% 57% 60% 70 % of external revenue 60 50 D 40 C 30 B 20
Slide 28: Production facilities
Production facilities • Sites: • Castings (Brownhills) – 14 acres • William Lee (Dronfield) – 14 acres • CNC Speedwell – 4 acres • Production facilities: • Castings (Brownhills) – 32,000 m2 (of which 5,000 m2 is warehousing) • 2 x Disamatic vertical moulding lines (up to 15kg part weight) • 1 x GF/D
Slide 29: Recent investments
Recent investments • Robotic handling and processing (started 2016) • Over 62 robots across the group • £13m investment to date • Roll-out continues • Warehouse management system (started 2017) • Bespoke FIFO system in Brownhills • £1m+ investment • Heat treatment plant for alloyed parts (commission