Castings Public Limited Company · LSE:CGS
Castings Public — Castings P.L.C. — FY2024 Earnings Presentation
30 slides from Castings Public's earnings presentation
Slide 1: Final results 2024
Final results 2024 1
Slide 2: Very strong truck demand, near record operating profit
Very strong truck demand, near record operating profit • Operating profit up 21% to £19.8m • Ordinary dividend up 5.6% • Special dividend of 7p/share • Machining operating profit of £3.7m • New foundry capacity provides great opportunity in other sectors • First set of solar panels installed • Forwa
Slide 3: Highlights of a busy year
Highlights of a busy year • Sales volumes up 1.5% in H1 • Backlog demand normalises; down 5% for full year • Price increases to fully recover labour and general cost inflation • Energy surcharges (at nil margin) for full year (only H2 in FY23) • Operating margin up to 8.8% (FY23 – 8.1%) • Margin exc
Slide 4: The year in a bit more detail
The year in a bit more detail Strong demand, investing for efficiency and cost increases embedded in prices Customers Production Pricing and costs Pent-up truck demand Investment Input prices stable Normalisation in Q4 - Replacement, efficiency Electricity pass-through Replacement parts now - Roboti
Slide 5: Revenue growth of 12% despite volume fall
Revenue growth of 12% despite volume fall • Reduction in volume of 5% – mostly in Q4 • Continued increase in mix of machined parts (63.3% v 59.2%) • Energy surcharge for 12 months (FY23 H2 only) • Other surcharges and price increases www.castings.plc.uk 5
Slide 6: European heavy truck registrations hit a high
European heavy truck registrations hit a high European heavy truck registrations (calendar year) 400,000 • 80% of revenue (FY23 - 77%) 350,000 • 2023 peak of 342k trucks Units registered 300,000 • COVID / supply issue backlog Volvo estimate Volvo estimate 250,000 • Normalisation of demand 200,000 20
Slide 7: Quarterly sales tonnes; strong Q1 – Q3, drop in Q4
Quarterly sales tonnes; strong Q1 – Q3, drop in Q4 Quarterly sales weight (tonnes) 16,000 15,000 15,288 14,000 13,000 13,607 13,311 12,000 12,658 12,617 12,329 11,879 11,843 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY17 FY18 FY19 FY20 FY21 FY22 FY23 F
Slide 8: 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 9: A strong performance in the year
A strong performance in the year £m (unless stated) FY23 FY24 • Operating profit up 20.7% Revenue 201.0 224.4 • Enhanced operating margin Operating profit 16.4 19.8 Operating margin 8.1% 8.8% • EPS up 21.4% EPS 31.66p 38.45p Return on capital employed 17.0% 19.5% • ROCE highest since 2016 Ordinary d
Slide 10: Segmental result per tonne
Increasing profit per tonne sold 450 60,000 • Segmental profit close 400 55,000 to £400/t Segmental result per tonne 350 50,000 • 3rd consecutive year of Sales tonnes 300 45,000 increase 250 40,000 200 • Highest in last 15 years 35,000 150 100 30,000 • Greater machining FY10 FY11 FY12 FY13 FY14 FY15
Slide 11: Progressive ordinary dividend policy continues
Progressive ordinary dividend policy continues 20.00 9.3% 10% Supplementary 18.00 9% dividends: 16.00 7.5% 8% 6.9% 14.00 6.4% 7% • 2016 – 30p Pence per share 12.00 5.6% 6% 5.0% 5.0% 5.0% 10.00 4.7% 4.7% 4.7% 5% • 2019 – 15p 4.3% 4.3% 3.8% 8.00 3.5% 4% 2.9% 3.1% • 2022 – 15p 6.00 2.7% 2.6% 3% 1.9% 1.
Slide 12: A solid result for the foundries
A solid result for the foundries £m (unless stated) FY23 FY24 • External revenue up 11.8% Gross revenue 223.7 251.0 • Volume down 5% Less: inter-group revenue (24.7) (28.5) External revenue 199.0 222.5 • Selling price impacted by: • Increasing mix of machined parts Foundry sales weight (tonnes) 53,1
Slide 13: Machining results keep improving
Machining results keep improving £m (unless stated) FY23 FY24 • Gross revenue up 36% Gross revenue 27.7 37.6 • External revenue flat – group focussed Less: inter-group revenue (25.6) (35.7) External revenue 2.0 1.9 • Segmental result up £3.5m • Q1 – Q3 high volumes Segmental result 0.2 3.7 • Group s
Slide 14: Summary cash flow statement
Summary cash flow statement £m FY23 FY24 • Enhanced profit levels PBT net of tax payments 13.8 18.9 Depreciation 8.6 8.9 • Replenished stock levels Working capital movement (2.7) (7.2) • Increased investment and more to Capex (net) (6.2) (9.4) come with new foundry Free cash flow 13.5 11.2 Net pensi
Slide 15: Capacity investment on track and on budget
Capacity investment on track 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 • June 2025 • Aim to run the plant (excluding • First new foundr
Slide 16: Strong sustainability credentials
Strong sustainability credentials • ‘Green Iron’ producer already, unlike • Head of sustainability appointed some of Europe • First sustainability report imminent • Near zero scope 1 and 2 emissions on location-based measure, working on 3 • First solar panel project operational • Process recycler •
Slide 17: Automation investment
Automation investment • £13m investment in automation • First investment in 2016 • Over 60 robotic handling and processing cells • Production efficiency • Typical payback in 2 – 3 years • Exploring use of AI • Metal treatment • Inspection www.castings.plc.uk 17
Slide 18: 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 19: What the future might look like
What the future might look like • Steady truck volumes • Capital investment • Demand normalised in short-term • Foundry capacity • Potential schedule increases in autumn • Machine replacement programme • Scania CBE engine to MAN from 2025 • Automation / multi-manning • Light duty truck electrificati
Slide 20: 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 21: Appendix
Appendix 21
Slide 22: 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 23: 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 381 employees 412 employees 358 employees * production capacity which, after machining, converts to a sal
Slide 24: Established, long-standing customer base
Established, long-standing customer base www.castings.plc.uk 24
Slide 25: 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 26: 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 27: 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 28: 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 29: 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 30: 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