Walsall-based foundry firm Chamberlin has plunged into the red after being hit by “exceptionally difficult trading conditions”, it was revealed today.

The company, which runs Chamberlin & Hill foundry, announced a pre-tax loss of £498,000 for the past year, compared to a £585,000 profit the year before.

The foundry, in Chuckery Road, had to cut working days and make 30 redundancies over recent months as customers like BMW and Mercedes-Benz slashed production. Around 100 workers remain at the site.

The firm today pointed to an underlying operating profit of £460,000 as cause for optimism, after stripping out costs, compared to £1.3 million in 2008, while income remained stable at £39.9 million.

A new management team has been working for the past two years to modernise the business. Chairman Tom Brown said today: “The first half of the year showed a significant improvement in profitability.

“However, the autumn saw the most dramatic decline in the engineering economy in modern times and the second half of last year proved to be extremely difficult.

“As a result, the achievements of the first half were reversed by the severe downturn in the second half.”

He added: “Chamberlin remains a technically strong, well managed group, with a sound balance sheet.”

Mr Brown said the fall in trading volumes had forced the board to suspend dividend payments to shareholders until conditions improved. At the same time the company’s pension deficit has grown to £1.8 million, from £1.1 million a year ago, due to the stock market downturn.

Despite the current market conditions, Chamberlin said it had continued to win new customers.