Cycle maker Tandem pedals to H1 loss as markets remain weak

BIRMINGHAM-based cycle manufacturer Tandem has announced half-year losses as a result of business rationalisation and costs associated with the purchase of its premises.

The net loss for the six months to the end of June was £475,000, which compared to a profit of £184,000 in the same period last year. Group revenue reduced from £14,372,000 to £11,251,000 over the same period.

The purchase of its Castle Bromwich premises was completed in February in a deal worth £2.6m. The transaction utilised more than £1,100,000 of cash.

Overheads were reduced by 9.2% to help counter the reduction in turnover and the firm said there had been a greater focus on reducing operating costs.

Exceptional costs of £58,000 (2012: £nil) were incurred in respect of redundancies following a streamlining of the Claud Butler business subsequent to the transfer of the corporate bicycle business to MV Sports & Leisure at the beginning of the period.

The overall performance was not helped by poor weather during the period, which contributed to a challenging trading environment with revenue and profitability in both bicycle and accessories and sports, leisure and toy businesses behind the same period last year.

Its bicycles and accessories businesses saw revenue drop by 19.4% to £7,187,000 (2012: £8,917,000).  This was as a result of both inclement weather conditions during the period coupled with reduced sales in its corporate bicycles business. Operating profit was £157,000 (2012: £377,000).

One crumb of comfort came from its ‘drop handlebar’ road cycle ranges, which were ahead of the prior year and sales of parts and accessories showed further growth.  Performance from its BMX ranges was said to be disappointing and reflected the current market trend away from BMX cycles.

Group revenue for the 37 weeks to September 13 showed the trend continuing, with figures down to £19.6m compared to £22m in the comparative period last year. The bicycles and accessories businesses were down to £11.2m against £13m in the prior year.

More encouragingly, it said group performance in July, August and September had been promising, particularly in the sports, leisure and toys businesses, with group revenue 10% ahead of the corresponding 11-week period to September 13 last year.
 
“Although we do not expect to fully recover the revenue position we expect the group to be profitable for the full year,” it said.