Castings Public Limited Company · LSE:CGS
Castings Public — Castings P.L.C. — H1 FY2025 Earnings Presentation
28 slides from Castings Public's earnings presentation, September 2024
Slide 1: Interim results
Interim results September 2024 1
Slide 2: The headline numbers
The headline numbers • Revenue £89.2m (down 19.9%) • Sales volumes down 18.4% • Profit before tax £4.1m (down 59.9%) • Interim dividend up 2.0% • Cash £16.3m - investment and supplementary dividends www.castings.plc.uk 2
Slide 3: Servicing a cyclical market
Servicing a cyclical market • Normalised heavy truck demand • Energy surcharges reducing • Operating margin reduced to 3.9% (FY24H1 – 8.6%) • Machine shop continues to trade profitability • Large casting foundry commenced trading – July 2024 • Strong demand in US • New foundry line at Dronfield site
Slide 4: The period in a bit more detail
The period in a bit more detail Reduced demand, right-sizing cost base and continued investment Customers Production Pricing and costs Normalisation of heavy truck Foundry outsourcing reversed Input prices stable demand in FY24Q4 continued Large casting foundry assets Electricity pass-through Europe
Slide 5: Castings Ductile Limited
Castings Ductile Limited • Acquired certain assets from administration on 14 June 2024 • Production commenced in July 2024 • Large iron casting business – up to 7 tonnes • Customer base in power generation and infrastructure markets • Majority of historical customer relationships retained • Loss of
Slide 6: Revenue following cyclical heavy truck sector
Revenue following cyclical heavy truck sector Revenue bridge (£m) 120.00 115.00 • Reduction in volume of 18.4% 111.3 110.00 105.00 • Reflects OEM heavy truck reductions 100.00 95.00 • Continued increase in mix of machined 90.00 1.2 2.4 89.2 parts (65.0% v 62.1%) (20.5) 85.00 (5.2) • Energy surcharge
Slide 7: European heavy truck registrations
European heavy truck registrations European heavy truck registrations (calendar year) 400,000 • 75% of revenue (FY24 - 80%) 350,000 • 2023 peak of 342k trucks Units registered 300,000 • Pent up demand cleared Volvo estimate Volvo estimate 250,000 • Normalisation of demand 200,000 2023 - 342,000 Volv
Slide 8: Quarterly sales tonnes – FY24Q4 fall continues in FY25
Quarterly sales tonnes – FY24Q4 fall continues in FY25 Quarterly sales weight (tonnes) 16,000 16,000 17.5% 15,000 17.1% 15,288 15,288 14,000 14,000 19.8% 13,607 13,311 13,000 12,000 13,607 12,658 12,617 13,311 12,329 11,879 12,000 11,843 12,658 12,617 11,275 12,329 10,000 11,879 11,843 11,000 9,524
Slide 9: Supplying largest six European OEMs
Supplying largest six European OEMs • Supply top 6 in the European market • Cross-over into US and South America • Typical product lifecycle of 7 – 10 years • Often single source supply Source: Scania Annual and Sustainability Report 2023 • Opportunity - capacity coming out of European foundry secto
Slide 10: Performance KPIs for the period
Performance KPIs for the period £m (unless stated) FY24H1 FY25H1 • Revenue down 19.9% Revenue 111.3 89.2 • Gross margin 16.8% (FY24H1 – 19.1%) Operating profit 9.6 3.5 Operating margin 8.6% 3.9% • Operating profit down 63.6% EPS 17.68p 7.07p Interim dividend 4.12p 4.21p • Inflationary increase in di
Slide 11: Progressive ordinary dividend policy continues
Progressive ordinary dividend policy continues Ordinary dividend declared per share 20.00 9.3% 10.0% Supplementary 18.00 9.0% dividends: 16.00 7.5% 8.0% 6.9% • 2016 – 30p 14.00 6.4% 7.0% 12.00 5.6% 6.0% • 2019 – 15p Pence / share 5.0% 5.0% 5.0% 4.7% 4.7% 4.7% 10.00 5.0% 4.3% 4.3% 8.00 3.5% 3.8% 4.0%
Slide 12: Foundry segment
Foundry segment £m (unless stated) FY24H1 FY25H1 • External revenue down 19.9% Gross revenue 124.9 99.6 • Volume down 18.4% Less: inter-group revenue (14.3) (11.0) External revenue 110.6 88.6 • Selling price impacted by: • Increasing mix of machined parts Foundry sales weight (tonnes) 25,500 20,800
Slide 13: Machining remains profitable at lower volumes
Machining remains profitable at lower volumes £m (unless stated) FY24H1 FY25H1 • Gross revenue up 11% Gross revenue 18.2 16.1 • External revenue flat – group focussed Less: inter-group revenue (17.4) (15.5) External revenue 0.8 0.6 • Segmental result down £0.8m on lower volumes Segmental result 1.9
Slide 14: Summary cash flow statement
Summary cash flow statement • Reduced profit levels £m FY24H1 FY25H1 PBT net of tax payments 8.7 3.4 • Investment deposits of £4m included Depreciation 3.9 4.2 within working capital outflow Working capital movement 1.4 (6.7) Capex (net) (4.8) (6.8) • Increased investment and more to come with new f
Slide 15: Market leading sustainability credentials
Market leading sustainability credentials • Competitive advantage of being ‘Green Iron’ producer already, large parts of Europe are not • Near zero scope 1 and 2 emissions on location-based measure, working on 3 Green • Process recycler iron • First sustainability report released • Application appro
Slide 16: Looking forward
Looking forward • Heavy truck volumes • Capital investment • Demand normalised to lower level in short-term • Foundry capacity • Scania CBE engine to MAN - ramping up from 2025 • Machine replacement programme • Light duty truck electrification • Automation / multi-manning • Energy efficient / recycl
Slide 17: Well positioned for growth
Well positioned for growth Strong balance sheet providing the platform for growth Balance sheet platform Opportunities Cash levels Invest to drive production efficiencies No debt New foundry opens doors to new business Pension buy-in to buy-out New foundry provides scope for NPI with existing custom
Slide 18: Appendix
Appendix 18
Slide 19: 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 20: The Castings group
The Castings group Castings PLC William Lee Limited Castings Ductile Ltd CNC Speedwell Ltd Foundry – founded 1835 Foundry – acquired 1991 Foundry – acquired 2024 Machinist – acquired 1996 Capacity* Employees Capacity* Employees Capacity Employees Capacity Employees 30,000 370 40,000# 415 7,000 60 Ov
Slide 21: Established, long-standing customer base
Established, long-standing customer base www.castings.plc.uk 21
Slide 22: Top commercial vehicle customer revenue mix
Top 4 commercial vehicle customer revenue mix FY11 FY16 FY18 FY19 FY20 FY21 FY22 FY23 FY24 Customer A 23% 25% 30% 29% 28% 28% 23% 25% 27% B 11% 13% 13% 13% 13% 14% 15% 15% 17% Commercial vehicle C 1% 4% 8% 10% 9% 10% 12% 11% 11% 80% (FY23 - 77%) D 10% 9% 10% 10% 9% 7% 7% 9% 9% Total 45% 51% 61% 62%
Slide 23: Revenue and PBIT
Revenue and PBIT 240 25% 220 200 20% 180 160 140 15% 120 100 10% 80 60 5% 40 20 0 0% FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 Revenue PBIT (excluding exceptionals) PB
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 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 Dividend (supplementary) Net capex Pension contrib
Slide 25: Capacity investment progressing and on budget
Capacity investment progressing and on budget • 12,000 tonnes foundry capacity • Provides capacity to quote for more diversified work • 10,500 sales capacity (estimated) • Increases our size offering • £17m investment • Maximum efficiency • Summer 2025 • Aim to run the plant (excluding • First new f
Slide 26: 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 27: 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 28: Recent investments
Recent investments • Robotic handling and processing (started 2016) • Warehouse management system (started 2017) • Bespoke FIFO system in Brownhills • £1m+ investment • Heat treatment plant for alloyed parts (commissioned 2020) • £0.6m investment • Disa moulding line upgrade (completed December 2021