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Sevcon optimistic after recent upturn

Wednesday, May 8, 2013

One of the region's biggest electric vehicles firms expects to capitalise on global demand for green transport, as it aims to build on an upturn in sales in the last three months to drive back into the black. Gateshead-based Sevcon's half year results up to the end of March 2013 show revenues of £9.5m (US$14.6m), down from £12.2m (US$18.6m) in the same period last year. The Team Valley-based company, which is listed on the New York Stock Exchange, also recorded a loss of £1m (US$1.6m) for the half year period, compared to a profit of £600,000 in the same period last year. But revenues for the second quarter within this period were £5.3m compared £4.3m in the first three months of its financial year.

The manufacturer of electric controllers for on and off road vehicles suffered from the US fiscal cliff crisis and woes in the Eurozone in late 2012 and early 2013, but is now experiencing an upturn. This loss includes a restructuring charge of £400,000 due to personnel reductions and additional structural changes. Sevcon's recent improvement has been reflected in in its share price which has climbed 25 % in the last six months and is now at US$4.19 (£2.71). President and CEO Matt Boyle said:  "Conditions in both the off-road and on-road segments of our business continue to be very challenging, and product demand remains well below the levels of a year ago. "However, the pickup in order flow that we began to experience in January continued through the second quarter. Our lead times and visibility have stabilized, and we were encouraged to see some pockets of end-market strength materialize as the quarter progressed." "Our highest near-term priority is to return Sevcon to profitability. "We have taken out costs without, we believe, jeopardizing the long-term growth of the business. We implemented personnel and cost reduction measures in the second quarter designed to rapidly accomplish this goal, based on the assumption of continued soft demand. "We expect these measures to result in approximately US$2m (£1.3m) of annual savings. Although we incurred a related restructuring charge of US$605,000 (£400,000) in the second quarter, the associated cost reductions enabled us to narrow our operating loss.

"We believe that Sevcon is well-positioned to leverage the underlying strength in global demand for environmentally friendly transportation. "We are continuing to expand our portfolio of relationships with OEMs and automotive suppliers in Europe, Asia and North America. "At the same time, our engineering team is working closely with our customers around the world on solutions for making electric vehicles safer, more convenient and less costly to operate than ever before. "Although the near-term demand environment remains less than favourable, we began the third quarter with a stronger backlog than we began the last two quarters and we have both an improved order flow and a lower cost structure. "We remain committed to returning the business to growth and profitability, and look forward to reporting continued progress toward this goal in the quarters ahead."

Sevcon's sluggish first six months of its current year follows three years of successive strong growth. Results for its last full year, ending September 31, 2012, saw revenues rise by 10% to £22m, and profits rise to £740,000 compared to £442,000 in the previous year. In the last six months the company has opened a new office in Germany to target its premium motor manufacturers VW, Audi and BMW, as well as secure partnership deals in a number of additional European countries. Although listed on the NASDAQ the company was launched on the Team Valley over 50 years ago, where it employs over half of its 100 staff. Its range of motor controllers for electric and hybrid vehicles, which are designed by its skilled engineers in Gateshead, are used to vary the speed and movement of vehicles, to integrate specialized functions and to prolong the shift life of vehicles' battery.

Sevcon has a particularly strong presence in the industrial and construction sectors featuring in many of the world's fork lift trucks, aerial lifts, airport ground support and mining vehicles.
It has designed and manufactured controls for companies such as Renault, Toyota, Ford,Nissan, and Hyundai for a range of on and off road, zero-emission vehicles. To ensure it has a pipeline of skilled staff to meet its future business needs the company recently sponsored engineering undergraduates at Newcastle University and Northumbria University. It intends to spend over £200,000 sponsoring up to six more over the next few years and has also doubled its apprentice intake. The company has factories in China, Mexico and Poland, and offices in France, the US, Germany, Korea and Japan

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