31.10.2008

Bronto expands as margins slip

Bronto, the truck mounted lift producer, now part of Federal Signal, has reported revenues for the first nine months up by over 25 percent, while order intake leapt 32 percent. Order intake for the period was $138.5 million up just two percent on the same period of 2007.

The company says that taking out the currency gain, and order intake was down slightly on last year, largely due to softer demand in Europe offset by growth in other markets.

The company’s backlog at the end of September was $175 million 32 percent higher that at the same time last year.

Bronto has also completed the expansion production space by 40 percent and is in the process of ramping up production in order to help meet the increased demand that has resulted in order intake consistently outpacing its capacity.

Operating income fell by eight percent to $8.6 million due to a 60 percent drop in third quarter income, due to higher component costs, a high level of sub contracting, higher costs associated with transition to the expanded plant, higher promotion and launch costs associated with the next generation product range and a bad debt from the failure of Blueline its previous U.K. distributor.

The company says that benefits of the plant capacity expansion are expected to reduce fourth quarter production costs as subcontractor costs are eliminated.

Vertikal Comment

Bronto has gone from strength to strength over the past two years or so, and apart from the bad debt incurred in the UK a the third quarter drop in profitability was as much a result of the companies success as anything else as it tries to keep up with an order intake level that has repeatedly outpaced its production capacity.

The new expansion should allow it to reduce costs and help it reduce lead times, allowing it to bring in yet more business as demand for large truck mounted lifts continues to outpace supply.