Cutting costs is key to JCB profit
The Rocester manufacturer yesterday posted pre-tax profits of £39 million for 2008, down almost 80 per cent from a record £187 million the year before.
Turnover dropped from £2.25 billion to £2 billion, with the company selling 57,000 machines in total, down from 72,000 in 2007.
The global downturn in the construction sector means demand for JCB's core products has deteriorated sharply and the company has axed about 1,600 workers since last summer, to cut costs and keep production levels down.
Sir Anthony Bamford, chairman, pictured right, said it was these "difficult decisions" that allowed it to remain profitable in the face of challenging conditions.
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, Brazil and Russia."
With a global market share of almost 11 per cent, JCB remains the world's third-biggest construction equipment brand and the number one manufacturer of backhoe loaders.
The firm said a bright spot in 2008 was its agriculture division, where sales increased by 14 per cent.
It has also announced it is opening a new excavator assembly plant in Brazil, next to its existing factory in Sorocaba, which produced the firm's 400,000th backhoe loader earlier this week.
Matthew Taylor, chief executive, said: "The volume of excavators JCB sells in the region now justifies this investment and local assembly will put us in a more competitive position and allow us to further increase both sales and market share."
The recession is still hitting orders at JCB – last month, The Sentinel reported the firm was extending its autumn shutdown by a week at its World Headquarters in Rocester, JCB Earthmovers and JCB Landpower in Cheadle and JCB Cab Systems in Rugeley.
Gordon Richardson, GMB union convener at JCB, said: "We all want JCB to make as much profit as possible, because, consequently, that makes us safer in our employment.
"It was a shock to me that the company has made so much profit, but, then again, it's miniscule compared to what's been made in the past.
"Obviously, I want JCB to make as much as possible and, on the back of that, achieve better terms and conditions for all our members here.
"The profit made is a testament to the men and women who built the machines.
"Some of the people who have been made redundant might think the company is making money on the back of them being laid off.
"I don't think that's the case, but it would be nice if we could get some of those people back in work."
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