Interim profit down but turnover up for Toye & Co

BIRMINGHAM’S oldest manufacturer, Toye & Co has seen interim profit decline despite turnover increasing.

The Jewellery Quarter company, which makes military and masonic regalia, medals, badges and related textiles, said that in the six months to June 30, 2011 it had returned a profit of £9,120 (2010:£26,205).

This was based on a turnover of £4,495,726, an increase of £360,000 over the corresponding period in 2010.

The firm said the increase in turnover was achieved despite last year’s performance benefitting from a large contract which has yet to be replaced. 

However, it added that while gross profit was higher in absolute terms than in the previous year, the gross margin had fallen, largely due to continuing increases in raw material costs, most notably precious metals.  This has resulted in a lower pre-tax profit than in the corresponding period last year.

Following completion of the large contract, the firm said it had had to make a number of staff redundant and there were fears more may follow if business did not pick up.

In a statement, chief executive Fiona Toye said: “With the end of the large contract it was sadly necessary to make some staff redundant at our Birmingham factory.

“We do not anticipate any significant improvement in our markets in the coming months.  In addition, we continue to seek ways of reducing our overheads without jeopardising our reputation for quality, supply and customer service.”

The announcement hit the firm’s shares hard and they were down more than 25% in early trading.

The firm said current trading conditions remained extremely challenging in all market areas.  The reduction in spending by government departments and other organisations has resulted in reduced capacity to spend both for organisations as well as for individuals.

Operational efficiency and productivity has improved and in some markets and the firm said it had obtained the majority of available work, with new customers added to its client base. 

“However, in the short term, this has not improved profitability as customers are generally purchasing smaller volumes and because of the gross margin pressure referred to earlier,” added Ms Toye. 

“With our specialist and location-focused craft skills, it is difficult to reduce overheads by combining sites but we continue to concentrate our efforts on improving productivity at all levels of the business.”

The company said it remained committed to retaining the highest level of craftsmanship so despite a reduced workforce, it continued it continued to possess high levels of skills and experience.