Spiralling demand for petrol turbochargers by car manufacturers has helped put a Midland firm back on track and set for a bright future.

Chamberlin has foundries in Walsall, Leicester and Scunthorpe, along with a number of other businesses, but it is the Walsall site’s turbocharger manufacturing that is propelling the company to new heights.

Results to the year ended March 31 revealed a return to full year profitability with an underlying operating profit of £0.9 million, a 40 per cent increase in revenues to £39.8 million and the restoration of a 1p dividend six months ahead of schedule.

Chamberlin manufactures castings used in a wide variety of industries, from construction to mining with castings for turbochargers produced at its Walsall foundry.

Demand is being driven by a rapid rise in the production of cars with petrol turbochargers as manufacturers seek to hit tough emissions targets by 2015/16.

Chief executive Tim Hair said: “Two things are driving growth, the recovery of car manufacturing in Europe and increased turbocharger demand.

“Diesel cars have been turbocharged for a long time and we have been making castings for them but car companies are under a lot of pressure over emissions and the only way they can do that is by turbocharging petrol engines.

“The number of petrol-powered cars with turbochargers is going to go from ten per cent to more than 90 per cent as they seek to increase efficiency - which is great for us. We expect demand for turbochargers in Europe to go up by 50 per cent.”

Mr Hair said the company was perfectly poised to make the most of the boom as it is one of only four companies in Europe that is able to manufacture automotive turbocharger castings to the required standard.

Eighteen months from now he revealed it will be making £5 million worth of turbocharger castings for one of its main customers, IHI Charging Systems Europe, which compares with a figure of £2.5 million 18 months ago.

IHI is one of two main turbocharger casting customers, the other being Borg Warner, with castings produced by Chamberlin used on Volkswagen/Audi Group, Mercedes Benz and BMW vehicles, among others.

Mr Hair also paid tribute to the business as a whole and its diverse product portfolio.

“Turbocharger castings are a very important part of what we do and a great opportunity for Walsall but we are winning work in hydraulics, construction equipment, mining and the rail industry,” he said.

“Our castings skills from the three sites are relevant to lots of industries and we see there is plenty of growth opportunity.”

Mr Hair also welcomed a reversal in the trend to opt for the cheapest option when sourcing manufactured products.

“A lot of sourcing went east to China and India pre-recession but a lot of people found it wasn’t as easy to buy engineering products,” he added.

“The pendulum is swinging back. At the top end of the food chain we were never at risk but at the second and third level of complexity some of that went to China but it has come back – either as a result of quality or supply chain issues.

“Frankly it is a great time to be in engineering in the UK. It is never an easy place to be but if you are able to provide a good service there are lots of opportunities.”

Welcoming the return of a dividend Mr Hair said: “It is at least six months earlier than market expectation. We stopped paying as the recession bit and are really pleased to be able to come back six months earlier than anticipated.

“Tight management of our working capital and a return to profitability mean we have a strong enough working balance sheet to pay a dividend again and it also shows our positive view of the future.”

And Mr Hair hinted at the prospect of further expansion with potential acquisitions if “the price is right”.

Chamberlin turned down the chance to buy Midlands door closer manufacturer Jebron for £2.5 million – a figure Mr Hair described as “a ludicrous sum” – but snapped up the company’s assets for £160,000 when it went into administration.

“We have operated on the Walsall site since 1890 and got long-serving employees who are the second or third generation to work there, part of the continuity of our skill base and from that point of view we fly the flag for West Midlands manufacturing,” he added.

“But what we do isn’t traditional – it has moved on and innovated like a lot of Midlands engineering companies. We are the best in class with the best in class technology.”

And the future looks bright. Chamberlin’s brokers Charles Stanley are predicting underlying profit before tax targets of £1.6 million for this year, £2.2 millions for the year after and £2.5 million for the year after that, which compares more than favourably to a pre-recession figure of £1.6 million.