JCB stays in the black with £39m profit

Plant manufacturer JCB has turned a pre-tax pre-exceptional profit of £39m for 2008, despite a severe deterioration in market conditions.

The company said that taking "tough decisions" had allowed it to stay profitable in a year which saw the global construction equipment market shrink 15%.

It generated a turnover of £2bn and sold 57,000 machines worldwide. But JCB declined to reveal what its pre-tax profit after exceptional items was.

It also highlighted a bright spot in the JCB Agriculture division, which achieved a sixth successive year of growth and saw sales rise by 14%.

But in an interview with the Financial Times this morning, JCB chief executive Matthew Taylor said the company's revenues could drop by between 35% and 40% in 2009, which would make it one of the biggest year-on-year falls in the company's 64-year history.

"The company has never made an (annual) loss and we are going to work hard to try to prevent this happening," Taylor said.

And he warned that unit sales could drop to 35,000, compared with 56,000 in 2008.

In 2007, JCB reported a global turnover of £2.25bn and profits of £187m on sales of 72,000 machines.

Commenting on the company's 2008 results, chairman Sir Anthony Bamford said: "After several years of growth, 2008 was very challenging for the construction equipment industry. JCB responded quickly to the downturn by taking difficult decisions to ensure production remained aligned to demand. These actions ensured we remained profitable and the ongoing cost reduction programme at JCB means the company is set to emerge from the downturn stronger, leaner, fitter and more successful than before. This will mean JCB can continue to invest in its products and factories, which is vital to meet the demanding requirements of our customer base.

“World markets have continued to decline in 2009 but JCB’s sales have not fallen at the same rate which means we are continuing to gain market share in some key markets, including the UK and Ireland, Germany, Brazil and Russia and the CIS.”

The company also confirmed that it would expand its global excavator production capacity with the opening of a new assembly plant in Brazil, where the company has already produced its 400,000th backhoe loader.

JCB will start production of the 20t JS200 models at the 14,000m2 site, which will supply machines across South America.

JCB chief executive officer Matthew Taylor said: "Since JCB began manufacturing in Brazil nearly a decade ago, we have made significant strides in growing our market share in the country and in the Latin American region. The time is now right to build on that position and invest in an excavator assembly plant to better serve the South American market. The volume of excavators JCB sells in the region now justifies this investment and local assembly will put us in a much more competitive position and allow us to further increase both sales and market share."