Carclo Falls as Company Navigates Currency Headwinds

Carclo PLC (LON: CAR) shares declined on Friday after the company announced a trading update ahead of its AGM, revealing a performance in line with management expectations despite foreign exchange challenges.

The specialty engineering group is demonstrating resilience through margin strength and underlying growth in key segments, offsetting revenue pressures from currency fluctuations and lower Design and Engineering (D&E) activity.

Group revenues experienced a slight dip due to a strengthening sterling, which created foreign exchange headwinds.

However, the company maintained its overall performance targets, highlighting the effectiveness of its operational strategies.

Operating cash flow remains on track, although net debt increased due to a £5.1 million payment into the defined benefit pension scheme in April 2025. Carclo continues to maintain tight capital discipline, with working capital remaining at the lower end of its target range of 5% to 7.5% of sales.

The Board anticipates a partial recovery in D&E revenues during the second half of the year, while also expecting to maintain strong margin performance throughout the year.

CTP Manufacturing Solutions has seen positive results from its strategic realignment, completed in September 2024. The consolidation of US operations into Pennsylvania, coupled with a new management team and specialized production cells, has led to improved operational performance and resource utilization.

The US business is now exhibiting both underlying sales growth and stronger margins. EMEA operations are performing well, with steady top-line growth and solid margin performance driven by a focus on high-volume, automated solutions in the UK and flexible, medium-volume runs in the Czech Republic.

Asia Pacific operations present a mixed picture, with China exceeding expectations and India experiencing lower-than-forecast sales due to reduced demand from a key customer. New business secured in India is expected to mitigate this shortfall in the second half.

CTP Design and Engineering revenue year-to-date fell short of expectations due to decreased customer activity in the US. However, EMEA D&E customer project activity exceeded both expectations and the prior year's performance. The D&E team is focused on asset revitalization and efficiency improvements in the global manufacturing platform, which is crucial for achieving medium-term financial goals.

The Speciality business continues to demonstrate strong growth, fueled by robust demand from the aerospace sector and market share gains in specialist machining. This has resulted in double-digit revenue growth, with strong margins maintained through operational performance and niche offerings. Investment in additional capacity, including a new CNC machine operational in the French facility, supports this growth trajectory.