Sevcon fortunes pick up after significant losses

A major restructuring at the Gateshead-based electric vehicle company Sevcon has contributed to hefty losses this year

Matt Boyle, president and chief executive of Sevcon, with one of the company's electric cars
Matt Boyle, president and chief executive of Sevcon, with one of the company's electric cars

A major restructuring at the Gateshead-based electric vehicle company Sevcon has contributed to hefty losses this year.

The firm, which employs 110 people, has posted an operating loss for the 12 months ended September 30 of £577,000, down from £740,000 profit in 2012.

A sluggish first half to the year also led to revenues dropping from £21.5m to £19.6m.

Sevcon, which designs and manufactures controllers for on and off-road vehicles, has been operating from the Team Valley for more than 50 years. In the three months to September 2013, its fortunes picked up, with revenues increasing 10% to £5.4m.

The company also recorded operating profits of £250,000 for the same period, and says it expects to maintain this momentum, with market conditions now significantly improved.

President and chief executive Matt Boyle said: “Sevcon’s fourth-quarter growth was mainly the result of increases in shipments to customers in the global aerial work platform market. The underlying demand patterns have improved over the past three quarters, with increased demand in the U.S and relative strength in Asia.

“The key difference this quarter compared to the same quarter in fiscal 2012 was in Europe, where the recent pattern reversed and sales were up significantly year-over-year.”

In Sevcon’s traditional off-road markets, the ongoing improvement in the global aerial work platform market continued to be offset primarily by weakness in the mining sector. In the on-road market, revenues were higher in Europe and there has been strong interest in the use of Sevcon’s control technology for hybrid electric vehicles.

Boyle added: “We are also continuing to make good progress in penetrating the overall two-wheel EV market on a global basis, and Q4 was another quarter of solid growth in shipments of controllers to OEM and Tier 1 suppliers to the scooter and motorcycle markets in Europe, Asia and North America. Looking forward, we believe there is far greater stability in our markets than at this point a year ago.

“While there is still some volatility, we are encouraged by what we are hearing from customers in both the off-road and on-road segments of the market.”

The company’s losses for the full year were the result of a major restructuring following the sales slump at the back end of 2012, Boyle said.

“The restructuring initiatives that we implemented midway through fiscal 2013 are delivering the $2m (£1.2m) of annualised operating cost reduction that we had anticipated,” he added.

“With a lower cost structure and conservative balance sheet, we believe that Sevcon is well-positioned for growth and improved profitability as fiscal 2014 unfolds.”

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