Tough markets take the shine off Toye’s improved interims

ONE of Birmingham’s oldest manufacturers has posted improved interim results but warned that its markets remain difficult to predict and could impact full year performance.

Toye & Co, based in the city’s famous Jewellery Quarter, manufactures military and masonic regalia, medals, badges and related textiles.

For the half year to June 30, 2012, the company achieved a profit of £527,559, a big increase on the £9,120 reported this time in 2011.

The firm’s turnover was £5,476,188, an increase on last year’s £4,495,726.  However, the firm said it was important to clarify this.

It said the results were boosted both in the first half of last year and this year by the income from two large contracts.  

“The underlying sales in our traditional markets have actually fallen reflecting the difficult business environment which will have an impact on our results in the second half,” it said in its interim statement.

Gross profit margins have increased this year due to the margins achieved on a substantial one-off contract, which was manufactured in-house, meaning additional overhead recovery was achieved while fixed costs remained constant.

While the results benefited from the income accrued from the large contract, turnover and return from traditional markets was reduced due to two main factors – the erosion of margins through pressure from customers, and the reduction in the volume and value of orders.

In view of this, the company said it was maintaining its strategy on clamping down on costs wherever possible.

“Management have followed a clearly defined strategy to reduce overheads and adjust our operational structure to respond to the current market requirements,” it said.

“We have consolidated the sales offices, reducing the manpower whilst working to deliver a motivated sales force, with our representatives out in the field ably supported by an efficient administration and effective supply chain.  Strengthening the management of our supply chain has been crucial for the continuous review of our cost base to achieve best margin, and for achieving best value in purchasing and so enhance our competitiveness and profitability.”

Redundancies have been made at all levels of the business from the senior management to the sales administration and shop floor.  It added that changes in procedure and processes were helping to achieve improved efficiencies and productivity.

Following the completion of the one-off contract during the first six months, the management and staff have agreed to the introduction of a 34-hour working week.  It said this was a highly effective cost saving measure but the firm said it hoped it could step up to a 37-and-a-half-hour week as soon as possible.

The firm said the overall economic environment was not inspiring.  However, it said there were a number of new projects and sales initiatives in hand.