Manganese Bronze in freefall after profit warning

Coventry-based black cab manufacturer Manganese Bronze saw more than one fifth of its share value wiped out as a profit warning sent shares into freefall.

The company, parent of cabmaker LTI, yesterday warned shareholders that profits would miss initial forecasts because of sluggish sales and the high number of radiator repairs it had had to carry out under warranty on its new TX4 model.

In a statement to the London Stock Exchange, the firm said it was currently preparing its full year results, including undertaking the regular year end review of its warranty position.

“As part of this process, MBH has identified a higher than expected warranty spend, mainly related to the now resolved TX4 radiator rectifications, which will be included in the preliminary results.

“The impact of the higher than expected warranty spend and lower than expected sales means that the outcome for the full year is now expected to be below current market expectations,” said the statement.

Sales of the iconic cabs remained slow in the UK last year as the recession forced many cabbies to delay plans to renew their vehicles.

Just 1,724 of the vehicles were sold and Manganese Bronze said this reflected the sluggish state of the UK economy and caution among drivers.

As a sales comparison, in pre-recession Britain in 2007 more than 2,000 of the vehicles were sold.

The TX4 has suffered a troubled life so far. Apart from the high number of leaky radiators, the company was forced to recall the model in 2007 when a number of the vehicles burst into flames.

It is also having to fight off competition from the Mercedes Vito, which now claims to have captured around 30% of the London market.

International sales last year were impacted by the availability of financing, with 212 vehicles sold.

However, hopes are high that the cabs built by the firm’s Chinese partner Geely will continue to be well received.

Manganese Bronze said customer reaction to the Shanghai built cab had been positive and hopes were that sales of 1,000 vehicles could be achieved globally this year.

The firm also said a consultation process at LTI, which could see redundancies at the Coventry plant, was nearing completion and a further update would be provided when its full-year results were published.