Optare cuts losses as sales fall
HALF year sales have fallen 48% to £27.1m at bus manufacturer Optare after it experienced a “significant” drop in UK demand.
But the group, which has its main production facility in Leeds, cut pre-tax losses by a third to £2.6m in the six months to June 30 after slashing administrative expenses by 20% and reining in exceptional costs by £1.3m.
The firm also reduced its net manufacturing debt by 34% to £5.5m and pushed up its gross margin by 7%.
The order book stands at £24.4m, up from £8.8m last time and the board’s efforts to push exports should be reflected in the fourth quarter when 25% of revenue will come from foreign sales.
Chief executive Jim Sumner said: “I am delighted that, despite the challenging market conditions in the first half of this year the company has continued to make significant progress against its turnaround plan by further reducing its break-even point and debt while continuing to invest in ‘Green Bus’ development and export growth.”
As part of its cost cutting programme Optare has moved its three Leeds manufacturing sites into one location. It is still trying to sell its Rotherham site. An offer has been received but financing arrangements could not be agreed between the potential buyer and its bank.
Last month Ashok Leyland, one of India’s biggest commercial vehicle manufacturers, agreed to take a 26% stake in Optare. It said the deal will enable it to improve cashflow, increase export sales and tap into low cost sourcing channels used by Ashok, which is 51%-owned by the Hinduja Group.
