The UK’s booming automotive industry has helped a Brownhills industrial outfit Castings plc to a half-yearly pre-tax profit of £9.57 million, but it faces a short-term reduction in demand because of upcoming European regulations.
The rise in profit at Castings was countered by high costs caused by a surge in demand from customers racing to beat regulations surrounding an exhaust system which is set to be introduced next year.
Castings said it was forced to recruit new staff at short notice to be able to fulfill the orders. Sales for the six months to the end of September were almost £66 million - up from £60.4 million on the same period last year when pre-tax profits were £9.11 million.
In a statement from chairman Brian Cooke, the company said it had experienced exceptional levels of demand mainly from commercial vehicle customers.
It added: “Regrettably this caused certain inefficiencies in our operations and also logistics problems resulting in excessive cost. We also had to recruit new employees at short notice; this is costly due to training requirements.
“The increase in demand we understand was caused by pre-buy of commercial vehicles before the end of 2013. In the new year only Euro 6 exhaust systems can be sold in Europe, so we anticipate a short-term reduction in demand during the early part of 2014. In view of this it is impossible to forecast the outcome for the remainder of this financial year.
“However we are encouraged that we have obtained orders for new projects and the future remains promising.”
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