Losses widen at Chamberlin amid problems at new Walsall factory
Difficulties in its new Walsall machining facility saw castings specialist Chamberlin's losses widen in the first half of the financial year.
While the company delivered on its revenue targets, the launch of its new centre on the Maple Leaf Industrial Estate was dogged by "technical problems" that squeezed on margins.
Revenue for the six-month period to September 30 rose from £14.7 million to £17.9 million, but operating losses widened from £211,000 to £604,000.
The problems had been spelled out in a profit warning issued by the company last month, and in the latest announcement to the market chairman Keith Butler-Wheelhouse warned that the problems were likely to continue for longer than had been expected.
However, the company is now "pursuing a claim" against the supplier of the new machining cells at Walsall.
Some of the squeeze on margins also came from restructuring at the company's Leicester site.
"While the first half of the year has delivered on our revenue expectations, margins have suffered due to the difficulties we have encountered with the start-up of our new machining facility," he said.
"We are working closely with the machine and tooling suppliers to resolve the technical problems that have had a significant impact on our foundry margins, however it is now clear that resolution of the technical problems is likely to take longer than expected."
He added: "Looking ahead to the full year, management still expects Group revenues to be substantially ahead of the prior year, but its profitability will be materially impacted. Demand for turbo charger bearing housings, a key growth driver for the Group, continues to grow."
The company's foundries at Walsall and Scunthorpe grew revenue from £9.5 million to £12.4 million, while the new Walsall facility generated revenues of £0.8 million – although it brought a £0.2 million loss after its teething troubles.
The engineering division, which comprises Walsall-based Exidor and Birmingham's Petrel saw revenues increase by 6.7 per cent to £5.5 million.