Longbridge has drastically cut its annual losses from over £12 million to just £392,000 as the rebirth of Birmingham’s most famous auto factory gathers pace.
Results for MG Motor UK for 2010 show that sales of parts to China have helped slash cash losses at the car firm, which launched production of the MG6, its first all-new MG, in April.
Meanwhile, a capital injection of £7 million from the Chinese parent company also helped to bolster the firm’s financial status, the report reveals.
The vastly improved results come as sales of Longbridge’s first all-new MG for 16 years generates increasing revenues for the Birmingham factory following the relaunch of volume production.
The MG6 generated over £3 million of business in its first two weeks in showrooms, leaving many buyers facing a waiting list of up to six weeks for customised vehicles.
Director Hao Wang says in the annual report for 2010: “The company generated a turnover of £11,385,000 (2009 £6,887,000) in 2010. The significant increase in turnover during the year was mainly due to the increased level of sales of automotive parts to group companies in China.
“The loss after tax amounted to £392,000 (2009 £12,737,000). The significant reduction in operational loss was due to the increased sale of parts and service.
“The company’s cash flow has been fairly strong throughout 2010 with a total capital injection of £11 million from the parent company in May and June, of which £4 million was the conversion of long term loan into capital.
“Its increased service provided to SAIC Motor UK Technical Centre Ltd also contributed to the strong cash flow in 2010. At the year end the group holds significant cash balance of £9 million which is considered sufficient to cover its liabilities in the foreseeable future.”
The report confirms that Nanjing Automobile will continue to support the Birmingham operation.
“The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. No material uncertainties leading to significant doubt about going concern have been identified.”
The recent launch of the MG6, which is 80 per cent built in China and shipped to Birmingham for final assembly, is set to take annual car production at Longbridge into the thousands rather than the previous total of hundreds.
The debut of the MG6 marks the relaunch of volume car-making at the car factory over six years on from the collapse of MG Rover in April 2005, when 6,500 jobs were lost directly, and many thousands more in the supply chain. The rebirth of Longbridge will gain further momentum next month, when the MG6’s saloon counterpart goes on sale, while a new hatchback model, the MG3, is also in the pipeline.
Bosses at MG Motor UK are optimistic that 2011 will see the car firm move into profit thanks to the new revenues generated by the increased activities at the plant, which was effectively mothballed as a cash earner for years following the demise of MG Rover.
