China manufacturing benefits set to lift taxi maker’s earnings
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The London 'black cab' manufacturer Manganese Bronze said today (22 October) that its move – following this summer's annual shutdown – to manufacturing taxi bodies and panels supplied through its SLTI joint venture with Chinese car manufacturer Geely and their assembly as TX4 taxis in Coventry is expected to have a positive effect on the company's fourth quarter earnings.
In a trading statement, Manganese Bronze said the major change in production methods was achieved with minimal loss of production and represented a significant milestone in returning the Group to profitability.
However, the company said that trading in the UK continued to be impacted by the uncertain macro economic conditions even though UK sales for the third quarter were up 11.0% on Q3 2009 at 466 vehicles (Q3 2009: 420 vehicles). This was particularly encouraging as 2009 sales were boosted by the favourable impact of the now discontinued government funded scrappage scheme.
Overseas, interest in the TX4 remained high, but the adverse global economic conditions were still restricting the availability of finance to potential customers. Overseas sales for the third quarter, at 78 vehicles, were up 67 vehicles on 2009.
Earnings continued to be negatively impacted by the weakness of Sterling against the Euro (which has maintained the high cost of engines purchased from Italy) and UK sales discounts. Earnings were, however, now being positively impacted by the projects and initiatives to return the Group to profitability. These included the closure of the North American business, UK cost savings, move to UK assembly-only operation, restructuring of the UK dealer network, the Chinese supply of parts and TX4 international sales.
