Castings PLC Reports Strong Annual Results with 109% Increase in Operating Profit and New Foundry Capacity

Castings PLC final results analysis: profit surges despite softer revenue

Castings PLC has delivered the kind of result that makes you stop and look twice. Revenue slipped by 2.1% to £173.2 million, but operating profit more than doubled to £10.0 million from £4.8 million. That is the headline 109% jump, and it matters because it shows the business has got more efficient even while demand stayed below the boom levels seen two years ago.

This is not a story of booming end markets. In fact, management says heavy truck demand, which accounts for more than 70% of group revenue, remained subdued and around 10% below what OEMs – original equipment manufacturers – see as a normal trend level in Europe. So the big improvement came from better execution, steadier production, lower exceptional cost drag and a profitable contribution from newer operations.

Castings PLC key numbers from the 2026 annual results

Metric	2026	2025
Revenue	£173.2 million	£177.0 million
Operating profit	£10.0 million	£4.8 million
Profit before tax	£10.3 million	£5.6 million
Basic EPS	17.36p	9.60p
Cash at year end	£17.4 million	£15.6 million
Operating cash flow	£25.1 million	£12.3 million
Capital expenditure	£20.5 million	£13.2 million
Final dividend	14.19p	14.19p
Total dividend	18.40p	18.40p

Why Castings PLC operating profit rose so sharply while sales fell

The simple version is this: lower revenue did not mean weaker operations. Castings shipped 41,500 tonnes to third-party customers, up 1.2%, but average selling prices were lower because energy surcharges came down. So volumes were slightly better, but revenue did not fully reflect that.

On profits, a few things helped. The company says the steadier production schedule improved efficiency, the businesses were better sized for lower demand, and last year included £1.5 million of one-off additional electricity costs plus a £1.3 million loss at Ductile Castings. That means the year-on-year comparison is flattered a bit, but even allowing for that, this is still a strong recovery.

Foundry operations lifted segmental profit to £6.4 million from £2.9 million, with margin improving to 3.3% from 1.5%. Machining also had a decent year, with profit rising to £2.4 million from £2.0 million despite sales falling 4.7% to £30.6 million. That is the sort of performance I like to see in a cyclical industrial business – not flashy, just disciplined.

New foundry capacity at William Lee and Scunthorpe could drive future growth

This is where the investment case gets more interesting. The new foundry production line at William Lee was commissioned late in the calendar year and started production in the final quarter. It adds up to 12,000 tonnes of additional gross capacity, which is a 15% increase on the group’s current capacity.

That extra line also allows Castings to produce larger parts than before. In plain English, it can now quote for work that previously sat outside its range. For a manufacturing business, that matters because capacity growth is useful, but capacity with better capability is even better.

The other bright spot is Ductile Castings in Scunthorpe, the larger iron castings operation established in June 2024. Management says it was profitable and delivered a profitable second half, helped by a growing customer base and some consolidation in the UK larger casting market. That gives Castings exposure to products up to 7 tonnes and reduces reliance on its traditional heavy truck niche.

My view is that this is one of the most important parts of the announcement. The current year’s profit recovery is good, but these investments are what could support the next leg of growth if demand improves.

Castings PLC cash flow was strong and the balance sheet stayed solid

Cash generation was arguably the best line in the release. Cash generated from operating activities jumped to £25.1 million from £12.3 million, helped by higher profits and a big working capital inflow. Inventory alone fell by £9.3 million during the year, which freed up cash.

That matters because Castings spent heavily too. Capital expenditure was £20.5 million, up from £13.2 million, yet year-end cash still increased to £17.4 million from £15.6 million. A business that can fund investment, pay dividends and still grow cash is usually doing something right.

Net assets were broadly flat at £127.3 million, and total liabilities actually fell to £37.7 million from £40.8 million. There was a deferred tax increase to £10.4 million, largely linked to capital allowances and full expensing, but that is more of an accounting timing issue than a sign of stress.

Dividend unchanged at 18.40p: sensible caution or a missed chance?

The board is recommending a final dividend of 14.19p per share, taking the full-year total to 18.40p. That is unchanged from last year. Payment is due on 25 August 2026 to shareholders on the register on 24 July 2026.

Some investors may have hoped for an increase given the jump in earnings per share to 17.36p from 9.60p. But with £20.5 million spent on capital projects and new capacity only just coming on stream, I think holding the dividend flat looks sensible rather than stingy. Castings is backing its own operations first, which is often the right move in engineering.

Castings PLC outlook: improving demand, but one early setback to watch

The outlook is cautiously encouraging. Customer schedules currently suggest an increase of 5% to 10%, including new work from wind energy customers, and some OEMs have raised their European truck forecasts for 2026. That is positive, particularly as Europe accounts for nearly three-quarters of group revenue.

There is a snag, though. In the first two months of the new financial year, Northern Powergrid restricted power supply to the William Lee site by around 50%. Full power was restored on 24 May 2026 after the transformer was repaired, but this disruption offset the early benefit of stronger customer schedules.

There are also wider risks that should not be ignored. The US market remains weak due to tariff and economic uncertainty, and North and South America revenue fell to £13.0 million from £16.5 million. Customer concentration is another issue – heavy trucks still dominate revenue – so diversification into wind energy, agriculture and electrification-related work will matter.

What these Castings PLC final results mean for retail investors

This was a good set of results, full stop. Not because the market is booming – it is not – but because Castings improved profitability, generated strong cash and finished major investment projects while trading in a fairly flat demand environment.

The bullish case is clear enough: stronger margins, new capacity, larger casting capability, a profitable Scunthorpe operation and customer schedules pointing up by 5% to 10%. The more cautious take is that some of the profit jump reflects easy comparisons, the dividend was not increased, and heavy truck exposure still leaves the group sensitive to industrial cycles.

Overall, I think this RNS reads as quietly impressive. Castings has not produced a glamorous update, but it has produced a credible one. For retail investors, that usually matters more.