Import duties fail to put the squeeze on cycling and mobility group

Cycling and mobility scooter supplier, Tandem Group has said higher import duties are unlikely to put the squeeze on the company’s full year profits.

The Birmingham-based group said in a pre-close trading update that revenue for the year to December 2016 was £38.4m, an increase of 12% over the previous year.

“Margins were under pressure during the second half of the year as a result of sterling weakness and increased import duty on some of our products,” it said.

“To compensate for this we implemented a price increase in the latter part of the year, negotiated better buying prices with suppliers and where this could not be achieved, re-sourced to new factories.  As a result of these actions we expect to see an improvement in margin in 2017.”

It said group operating profit after exceptional items was also expected to be ahead of the prior year.
The performance of its various divisions was mixed.

Its sports, leisure and toys arm performed very well, however, the picture was not so rosy for its Bicycles and Mobility division, where revenue was approximately 26% behind the prior year.  

It said both its corporate and independent bicycle businesses encountered difficult trading conditions.

“Unlike the prior year, there was no significant promotional contract in our corporate bicycles division and revenue reduced as a result,” it said.  

“We continue to seek opportunities for future promotional business where it is possible to make an acceptable margin.”

To offset some of the problems, the company has implemented changes to the division.  

It has merged its Claud Butler and Dawes sales teams, rationalised the product development department and improved efficiencies within its Scunthorpe premises where all Claud Butler and Dawes products are warehoused together.  

As a result of the changes, the group said it expected to save approximately £1m of overhead costs in the bicycles businesses in 2017.

Its Pro Rider mobility business performed well but due to the decline in revenue and the challenging market environment, it reported a loss in the bicycles and mobility division.

Its Sports, Leisure and Toys division enjoyed a particularly successful year, with revenue up 43%, benefiting from a full year contribution from its ESC acquisition.

A number of licences performed very strongly including Batman, Disney Princess, My Little Pony, Paw Patrol, Shopkins and Trolls.  Its ‘evergreen’ licences such as Peppa Pig, Star Wars and Thomas & Friends also made substantial contributions.   
 
Elsewhere, its own brands, particularly Kickmaster and Hedstrom, also performed well and were ahead of the previous year.  

Revenue exceeded the prior year and as a result, it has continued to expand its product offering.
 
It also saw growth in its Ben Sayers golf business with both package sets and electric golf trolleys showing good growth.  
 
Consequently, profitability for the division is expected to be significantly ahead of the prior year.

To help towards this, the group has agreed several new licences, most notably Cars 3, PJ Masks and Transformers.  It said all three licences have the potential to do well during the year.