Aga hoping to get cooking again
Mar 16 2009 by John Cranage, Birmingham Post
Aga Rangemaster, the West Midlands-based maker of upmarket cookers and kitchen ranges, is trading on its 300-year history as a British manufacturer to get through the recession.
While the Leamington company’s order book is currently about 20 per cent down, the weak pound is making its Aga and Rayburn products more competitive abroad while making imported products from its European competitors more expensive, chief executive William McGrath said.
“As a UK, and Midland, manufacturer we will be playing up the fact we make great British cookers,” Mr McGrath added.
There are even positives to be found among the wreckage of the UK housing market. Even though Aga’s customers may not be moving house, near-zero interest rates are encouraging them to spend money on their existing properties and many are trading in their existing Agas and Rangemaster for more up to date models, said Mr McGrath.
He was speaking as Aga reported a 47 per cent fall in 2008 profits to £14.4 million and said revenues for the year had slipped by 4.2 per cent to £279.4 million. It has axed its full-year dividend – a move that will save about £5 million – and cut jobs in order to conserve cash, but the group said its balance sheet remained strong.
McGrath said that the company, which makes flagship Aga products at Coalbrookdale in Shropshire and Rangemasters at Leamington, said the business was well positioned to deal with the difficult times.
“The current markets are the least encouraging for many years but we are ready to take on these challenges and expect to become stronger with improved market shares.”
Aga has reduced its headcount from 3,169 to under 2,700 in the past year, while it has also reached agreements with the workforce and unions on the introduction of shorter working hours.
Aga enjoyed a strong start to the year, but was forced to take action on costs after a marked and sustained decline in activity in the period since September, with orders down by about 15 per cent in the last third of the year.
The company added: “Having taken these steps, the outlook is now tied to assessment of when the markets in which we operate first stabilise and then start to recover.”
It said that while overall cooker sales were lower last year, some lines – notably wood burning stoves and Rayburn cookers – performed well.
Mr McGrath’s optimism, however, is not shared by Panmure Gordon analyst Oliver Wynne-James. He said the company had left it too long before carrying out the restructuring. “We now forecast that Aga should be loss making in 2009,” he said.
