Tandem profits look healthy on premium brand sales
BIRMINGHAM-based bicycle manufacturer and leisure group Tandem has said full-year profits are likely to be ahead of forecast following strong sales of its premium brands.
The group has also bolstered its financial position with the £2.6m acquisition of the freehold on its Castle Bromwich base.
The deal has been funded through a five-year loan of £1.6m from the firm’s bankers and the balance from existing cash resources. Interest on the term loan will be charged at a rate of 2.5% above base rate.
Following the acquisition, the company said it expected to save approximately £0.3m per annum net of interest payments.
In a trading update ahead of its annual results for the year ended December 31, 2012 the group said it expected full year revenue to be similar to last year at £29m although profits were better due to the performance of its flagship brands, Claude Butler and Dawes.
This proved timely as revenue in the group’s bicycle and accessories businesses continued to be behind 2011. This was the result of weaker performance from lower price point and promotional products, inclement weather and a particularly poor Christmas sales of BMX bicycles.
Performance in its sports, leisure and toys businesses was similar to the prior year despite the challenging retail environment. Pepper Pig proved to be a strong licence in its first year and revenue from the London Olympic and Paralympics Games made a valuable contribution.
The generic range of scooters under the ‘Stunted’ brand also performed well ahead of expectation.
In outlook, it said its January cycle road shows were successful with both customer attendances and order intake significantly ahead of last year.
However, it said there was still some reticence by customers to take delivery of stock during the poor weather which has meant the year has started behind expectation.
This year’s range of bicycles has been extensively redesigned, particularly for touring and road bikes, and it said it had further product development plans in the pipeline to enhance its cycle offering.
“Despite the challenging retail climate, we remain cautiously optimistic for the year ahead,” it said.
