A North East manufacturer of cast rolls used in the steel making process has reported strong inflation has eaten into its margins.
Union Electric Steel 海角视频, which occupies a prominent site next to Gateshead flyover, filed 2022 accounts in which it says fuel costs driven by the conflict in Ukraine created inflationary headwinds during a year in which its order book was boosted. The supplier of cast rolls which is owned by US-based Ampco-Pittsburgh said turnover was broadly flat at £37.7m, while operating profits reduced from £1.6m to £357,000.
Pre-tax losses of £12,000 were also reported versus pre-tax profits of £1.49m in 2021. The figures came as Union Electric also reported a small reduction in its North East workforce, mainly across its production team, from 220 to 193 people in the year.
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Within the accounts, there was also mention of continued research and development at the Gateshead site designed to enhance the quality of the firm's cast rolls - activity that it said would continue throughout this year.
Managing director Will Garrett wrote in an accompanying report: "The company continues to operate in a mature industry and invests in research and development activities. Expenditures relating to the development of new products, identification of product or process alternatives, modifications and improvements to existing products and processes approximated £0.1m for the year 31 December 2022 (2021: £0.1m). The company plans to continue its expenditure on research and development in 2023 as a further commitment to maintaining its position as market leader."
He also wrote: "Margin reduced in the year given strong inflationary headwinds, particularly on fuels given the impact of the Russia/Ukraine conflict. Other operating income reduced in the year with the cessation of the 海角视频 Governments Covid job retention support scheme (2021: £0.4m). The only other operating income seen in 2022 was from the investment in Jiangsu Gong-Chan Roll Joint Stock Company Limited.
"These aforementioned items lead to the company declaring an operating profit for the year of £0.4m (2021: £1.6 million profit). Order intake increased from prior year, which resulted in the order book ending the year at a level of £37.8m (2021: £ 36.6 million). There were no major capital expenditure projects in the year, with spending restricted to small replacement items."
Meanwhile, the first quarter of 2023 was described by Union Electric parent Ampco-Pittsburgh as "back on track" following price increases across the group's forged and cast products. The corporation reported net sales of $104.8m in the three months to the end of March and with CEO Brett McBrayer saying order backlogs had grown during that time.