- Castings
- 18 February 2025 13:42:39
Source: Sharecast
Canaccord Genuity revised its estimates to reflect Castings' Tuesday trading for the year ending 31 March, which reported that core heavy truck customer demand schedules saw a further material reduction from mid-Q3, having previously fallen 20% year-on-year on an underlying market normalisation through H1.
More recently, Canaccord Genuity noted that Castings has seen Q4 volumes come back up to H1 levels as OEMs reported improving order intake, meaning there were tentative signs of volume growth through to Spring backed by rising sales volumes.
"While this underlying trading pattern results in a downgrade on its own, this has been compounded by two additional headwinds which we think impacts profits by a further ~£3.0m combined in FY25E, but which are not expected to recur in FY26E," said Canaccord.
The Canadian bank said that the first was enforced penalties on unused electricity volumes that had been forward purchased, and the second was start-up and trading losses in Castings' new Scunthorpe business.
"Our revised FY25E adjusted PBT/EPS estimates are therefore set 45% lower at £5.5m/9.4p with net cash down 33% to £10.6m. Importantly this sees the balance sheet in a strong and healthy position after significant capex and dividend distributions were made through the year," said the analysts, who reiterated their 'buy' rating on the stock.
"In addition, we prudently factor in a slower underlying market recovery in our FY26E/27E volume assumptions given low visibility."
Reporting by Iain Gilbert at Sharecast.com