18.05.2016

Profit slump at Sevcon

Sevcon the motor control manufacturer widely used in aerial lifts has reported a first half loss on higher revenues.

Total revenues for the half year were 10 percent higher at $22.3 million purely due to the additional revenues generated by the Italian battery charger manufacturer Bassi, that Sevcon acquired in January. Without that revenues were down $2 million, due to lower demand in the industrials side of the business, partially offset by growth in the aerial work platform and airport ground support markets. In spite of the higher revenues, last year’s pre-tax profit of $1.01 million turned into a loss of $1.57 million this year.

In the second quarter revenues were 28 percent higher at $13.2 million, with a pre-tax loss of $1.67 million, compared to a profit of $706 million in the same period last year, this included $1.1 million in acquisition costs associated with the Bassi purchase.

Chief executive Matt Boyle said: "We reported strong revenue growth in the second fiscal quarter due to the acquisition of Bassi, which more than offset slower sales of our traditional controllers and capacitors. The lower traditional sales were due to continued weakness on the industrial side of the business as a result of macro-economic conditions and customers reducing inventory. In addition, we reported lower sales for on-road applications due to reduced demand from US customers and lower revenue from engineering services compared with a year ago."

"Our Bassi acquisition performed excellently and ahead of our expectations and the integration is proceeding well. Bassi reported $4 million in sales since the January 29 acquisition, representing record months for the business. Adding Bassi's state-of-the-art battery charging technology and power management capabilities to Sevcon's advanced control technologies significantly strengthens our ability to deliver the more integrated solutions that our markets and our customers are demanding."

"The multi-year on-road design contract that we secured from an automotive manufacturer is one of several similar design wins that give us confidence for significant sales growth in the future."

"We expect continued growth from Bassi throughout the year, and we are taking steps to increase production and accelerate that growth even further. While our on-road business will continue to be lumpy in the immediate future, our robust sales pipeline portends well for the long-term. We expect our industrial sales to stabilize and begin to improve in the second half of the year after customers work through excess inventory. We are executing well on our strategy to capitalise on the many opportunities related to the global demand for electrification, and we look forward to making further progress as we proceed in fiscal 2016."