Castings plc, the Brownhills-based engineering group, has warned its shareholders that the loss of a contract is likely to result in a short-term drop in profits.

Chairman Brian Cooke used the company’s annual results to reassure shareholders that the loss of the contract at its CNC Speedwell subsidiary will only be “a temporary blip”. He said that CNC Speedwell had a good year, with improved profits, and that some new orders were secured to partly fill the vacant capacity.

He said: “This replacement work will not come on stream immediately, so it is expected that profits will fall during the current financial year, but an improvement will be seen in the 2017-18 financial year and onwards.

“Our investment in additional machining facilities reflects our commitment to this area and the potential opportunities for growth in the short and medium term. Customer demand remains steady at the present time; and unless there is a substantial change, we will only see a temporary reduction in profits.”

Mr Cooke said the group’s foundries had enjoyed stable trading conditions throughout the year and increased profits compared with the previous year.

He added: “I am pleased to report that we are making good progress at our William Lee division; a full re-organisation has taken place during the year to ensure that standards are raised in line with the Brownhills foundry. We continue to review foundry production techniques and technologies across the group and invest in areas that will enhance the returns in this segment.”