By Guy Taylor
Shares in Chamberlin plunged 20 per cent this morning after it hiked prices and announced a wide-ranging cost cutting programme to tackle a slowdown in demand.
The Walsall-based firm, which sells iron castings and engineering products, said underlying demand over the third quarter had been lower than expected.
Lower sales also “negatively affected profitability and working capital,” the company said in a statement on the London Stock Exchange.
As a result, Chamberlin said it would implement a “programme of cost reduction actions” across the group, including “labour reductions,” short time working and a restructuring of senior management.
The Aim-listed company is also hiking prices to increase cash generation after a full review of product margins. It expects to benefit from the actions within three months.
Shares in Chamberlin are down over 50 per cent in the last 12 months. Last week, the specialist castings group announced its chairman Keith Butler-Wheelhouse and finance director Alan Tomlinson intended to depart.
Chamberlin recently sold its specialist industrial manufacturing subsidiary, Petrel Ltd, in a £3m deal with Project Apollo, part of the investment firm Longacre Group.
It said today balance sheet debt had greatly improved as a result and it aimed to pay off the remainder of its legacy debt within the next 12 months. remainder of its legacy debt
“Working capital levels are being monitored closely following recent performance and the steps being taken by the management team are expected to improve this position going forward,” the firm added.
The group made pre-tax losses of £1.1m last year and said it was “adversely impacted by the effect of icnreases in the Bank of England base rate on financing costs.” Underlying operating losses reduced by 17 per cent to £0.7m.
