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County Durhams Hydram Engineering saw its profits fall by more than 30% last year and has warned that its turnover is expected to take a hit due to the pandemic and Brexit.

Hydram, which makes and sells sheet metal components and assemblies, saw its operating profit drop from 2.4m in 2019 to 1.6m for the year ending March 31 2020.

Turnover at the firm remained largely flat last year at 18.6m, compared with 18.8m in 2019, but the company has warned that the major economic uncertainties affecting the UK are likely to impact its future turnover.

David Greatorex, Hydrams managing director, said the drop in profits was due to a number of the manufacturers new rail contracts taking time to set up along with the companys Ferryhill factory being forced to close temporarily due to the coronavirus pandemic.

Mr Greatorex said: There were several principle factors that contributed to the decrease in profit. Firstly, the business was successful in winning some new major contracts from rail customers. However, these new projects involve a considerable set-up time before moving onto regular production volumes. Most of the people costs associated with the new part introductions were absorbed in FY2020, with the benefits not being realised until FY2021 and onwards.

Secondly, the business closed for a period prior to the end of the financial year as a result of the pandemic. This resulted in lost revenue and profit.

In the accounts Hydram added that the full impact of Covid-19 would likely lead to a global recession and it did not know when the economy would bounce back.

It also warned that if the UK Government failed to strike an advantageous deal with the EU the situation could be exacerbated.

Mr Greatorex added: The impact of Brexit on the business has been limited. However, there remain concerns in respect of the supply chain. While Hydram may be able to secure parts from the existing European or alternative non-EU supply routes, many of our customers are committed to EU suppliers.

If they cannot secure parts in a timely manner that may affect their build programmes, which could lead to delays, this would directly impact on their requirements from Hydram.

The uncertainty around Covid-19 remains a short-term challenge with individuals having to self-isolate.

The additional threat of further school closures will impact directly on those employees with children. Hydram is a manufacturing plant which makes it impossible for most employees to work from home. You cannot facilitate relocating a 1m automated laser cutting machine to the home of an employee for a few weeks!

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Hydram Engineering warns Covid-19 and Brexit will dent its turnover - Business Live