JCB sees annual profits fall, but stays in the black

Oct 28 2009 by Graeme Brown

Digger-maker JCB maker remained in the black last year despite making more than 1,000 Staffordshire workers redundant.

The company has posted pre-tax pre-exceptional profits of £39 million, despite the sharp deterioration in market conditions in the global construction equipment industry.

However, it was a significant fall compared to the £187 million record profits posted in 2007, after sales fell from £2.25 billion to £2 billion.

The historic firm employs around 4,000 people in Staffordshire, has axed around 1,600 jobs in the last 18 months, but retained its position as the world’s third largest construction equipment brand by selling 57,000 machines.

A bright spot in 2008 was JCB Agriculture, which achieved a sixth successive year of growth, with sales up by more than 14 per cent on the back of an agricultural sector that held up far better than the global construction equipment market, which shrank by 15 per cent during 2008.

JCB announced its annual results as the company also confirmed it was expanding its global excavator production capacity with the opening of a new assembly plant in Brazil where the production of JCB’s 400,000th backhoe loader was also marked this week at a special ceremony.

Chairman Sir Anthony Bamford said the results vindicated the firm’s decision to cut its workforce in light of falling demand.

He 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.”

JCB would not reveal the level of UK sales, but it has been reported that more than 30,000 machines were sold in India, which helped the firm achieve a global market share of 10.8 per cent.

The company also retained its position as the world’s number one manufacturer of backhoe loaders – which were first invented by company founder Joseph Cyril Bamford – with more than a third of the market.

JCB chief executive Matthew Taylor said: “Two in every five backhoe loaders sold around the world is made by JCB, a fabulous testament not only to the strong pedigree of this machine but also to the quality and innovation of the product over the past 56 years.

“JCB took 43 years to manufacture 200,000 backhoe loaders – we’ve taken just 13 years to produce the next 200,000.”

Mr Taylor said demand for machines in China this year would probably increase 10 to 15 per cent, adding that a similar rate of growth was likely in 2010.

Caterpillar Inc, the world’s biggest maker of heavy machinery, said on Monday it plans to permanently cut 2,500 workers even as increasing demand will allow it to recall some employees who were laid off during the economic downturn.