News Record First Half Still Leaves Alumasc Cautious

Building and engineering products supplier Alumasc has had a record first half, with underlying pre-tax profits up 11% to £3m even on a 4% drop in revenues to £57.2m.

But the company says that while it is expecting to see a recovery later this year, “short term demand has not yet shown any marked improvement outside the house building sector”.

It says a 5% drop in its building product’s divisions revenues to £42.4m in the six months to the end of December is mainly due to key contract £12m contract to refurbish an aluminium smelter in Canada coming towards an end. The contract at Kitimat completes this financial year.

The half year has seen the company’s engineering products division return to the black with a modest profit of £100,000 on a 2% rise in revenues to £15.5m.

Alumasc Precision Components remains loss-making, although the company says further work it is conducting on the business in the second half should reap rewards.

Chief executive Paul Hooper said: “Dyson Diecastings, which makes up a third of this business, has had a record half year, providing for people like Aston Martin and Bentley. We have even been working on sales that are going back to China. With the larger two thirds of the company we have been looking at improving the efficiency of the management team, and we have new projects coming in.”

The company’s order book at the end of December stood at £35m, compared with £44m at the end of June and £46m a year ago. But it says much of this is again down to the winding down of the Kitimat contract.

Looking forward, Hooper said he was “cautiously encouraged”.

He said: “The market forecasts have been very bullish, in particular the CPA’s predictions on private housing starts and completions for 2014 and 2015. That is only a small part of our business, but it is significant. We are taking the world on by improving our export markets, particularly in the USA and the Middle East.”

The company is also seeking to negotiate a longer deficit recovery period with its pension trustees, after draft calculations of its triennial pension valuation suggested that its deficit had more than doubled from the £11.5m recorded last time in 2010. But finance director Andrew Magson said this “will not affect our ability to invest in the business”.

Interim dividend increased by 10% to 2.2p, and both Peel Hunt and FinnCap have retained their “buy” recommendations for the company.

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