Losses for 600 Group following ‘challenging’ year

BRITAIN’S largest toolmaker 600 Group today reported losses of £8.9m from a previous £2m profit high following what it described as “its most challenging year to date”.

A like-for-like fall in sales of 2% to £76.2m for the year ended March 23, 2009, and impairment and restructuring costs contributed to the loss.

Losses from operations (before costs in relation to closed operations, restructuring and impairment of intangible assets) were £2.2m compared to a profit of £500,000 the year before.

Costs in relation to closed operations and restructuring were £6.1m.

Revenue for the Yorkshire-based group however only dipped slightly from £77.4m to £76.2m.

As well as weak demand, the group also experienced quality issues with machines outsourced to a Chinese partner, which eventually led to the cancellation of a joint venture agreement in Germany.

Supply has since been switched to ensure high standards are maintained.

Chairman Martin Temple said that the group, which has its headquarters in Heckmondwike, had tackled its challenges head on and had made “significant strides” to creating a stable platform for the group’s future.

“We entered the year facing a downturn in our main markets and, as serious problems with the group’s supply chain began to emerge, it became apparent that a radical overhaul of the business was required,” he said.

Since January, the group has closed 12 sites including relocating operations from Halifax to its main site and reduced its workforced by 210 employees. Short-time working and a reduction in the hourly rate of pay have also been agreed with staff as short-term measures to keep down payroll costs.

Further cost cutting measures are currently being implemented promising annualised savings of £5m including a one-off cost of £2.5m.

The structural changes have been overseen by chief executive David Norman, who joined the group last August.

Mr Norman added: “This has been an exceptional year for the group, not only in the light of the extremely difficult trading conditions and the major upheaval of our own restructuring process but, most importantly, our progress in creating a stronger 600 Group, better equipped not only to deal with current market conditions but also to deliver growth in the future.

“There is still a great deal of work to do but I believe that the group will soon be in a position to take advantage of any recovery as well as opportunities which may arise from the global downturn.”

He said that the group will continue to see machine tools and lathes products as its core business and the UK, Continental Europe and North America, remain key strategic markets.

“The challenging global economy has weakened many companies in our product or associated product areas and, we believe, this will present us with opportunities to expand the business over and above our own organic growth,” he continued.

The group also announced today that Chris Cundy, commercial director of VT Group, has agreed to join the board as a non-executive director.

He has a wide experience as a finance director in a manufacturing and service environment.