Alumasc profits deeply disappointing

published 4 September 2012

Building and engineering products group, Alumasc, saw profits slump after serious problems at its engineering arm hit full year results.

Underlying profit before tax came in at £1.6m in the year to the end of June, compared with £4.3m the year before.

Chairman John McColl called it "a deeply disappointing result", albeit in line with recent expectations.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Revenues from engineering products were steady at £36.8m but the division slumped to an operating loss of £0.8m after serious operational issues at Alumasc Precision Components.

This company said "an erosion of manufacturing disciplines and the mispricing of certain work" had led to lower gross margins in the business during the year.

The group has undergone a restructuring with the engineering division now operating as an independent and self-sufficient entity, with a full board of directors responsible to the group board for its recovery and sustained profitability.

It was different story at the firm's building products arm, where revenues were up 5% to £74.9m with operating profit up 12% to £4.4m.

This came despite the well-publicised decline in UK construction activity and reflected growth in export, roofing & walling, and construction product sales, Alumasc said.

A proposed final dividend of 1.0p took the total for the year of 2.0p, with the company saying it intended to restore "meaningful dividend payments" underlying earnings had grown to cover this.