Bus maker Alexander Dennis is rebounding from a huge dip in pre-tax profit last year with a bumper bus order for the UK and Ireland and an innovative arrangement to ship vehicles to Hong Kong.
Bus maker Alexander Dennis is rebounding from a huge dip in pre-tax profit last year with a bumper bus order for the UK and Ireland and an innovative arrangement to ship vehicles to Hong Kong.
Accounts obtained by The Herald from Companies House show that pre-tax profit for the 15 months to December 31, 2007, was just £6.5m compared to £10.4m for the 12 months to September 30, 2006. The company used a 15-month timescale to bring the reporting for all group companies into line.
The culprits for the drop, which came even as turnover rose to £267m, were the collapse of a chassis supplier and the acquisition of Yorkshire-based rival Plaxton in May 2007. The accounts reveal Alexander Dennis, which also has operations in Falkirk, Lancashire and Surrey, paid £25m for the company.
Chief executive Colin Robertson, who took the helm in April last year, told The Herald "the business has moved on a mile" since the period covered by the accounts.
Robertson, a former vice-president at US construction vehicle manufacturer Terex Corporation, received pay and pension contributions totalling £595,000 for the period between April and December 2007, as well as £170,000 relating to share options, although the company said this included relocation expenses.
He tipped Alexander Dennis to hit a turnover of £300m in 2008. "We have increased our manufacturing capacity by 50% in the last year. We are on course to grow revenue by 30% in 2008.
"We have significant new orders from our home and export markets and have confirmed we are going to build our business in China and are exploring our options in the United States."
The company revealed yesterday that it has received an order for 200 buses from Arriva, for delivery over the next 12 months. The order, which is for a mixture of single and double-decker vehicles, is worth some £30m to Alexander Dennis. It also received a £10m order for 50 vehicles from Dublin Buses.
In addition, The Herald understands that Alexander Dennis is on the cusp of securing a large order for delivery in Hong Kong that will see it send kits from Falkirk to the Chinese mainland for assembly. They will then be shipped by boat to the territory. It would be Alexander Dennis's first significant venture into the country.
Alexander Dennis is further considering establishing a manufacturing presence in the United States. It has done significant business in the country over the past two to three years, and executives feel it is prudent to establish a more significant presence in the country.
Another potential source of growth is the development of a hybrid diesel and electrical bus. Alexander Dennis expects to launch a low-emission prototype for trial in London in August or September. The company is hopeful of receiving orders during the nine-month pilot.
Despite last year's problems, Alexander Dennis, which employs 2200 people including 960 in Falkirk, still seems to have firmly turned around its fortunes since 2004, when its parent company declared itself insolvent with a £200m hole in its account and £200m of debt.
The Falkirk and Guildford, Surrey, operations of TransBus International were bought out of administration in 2005 for around £90m by businessman Sir David Murray, merchant bank Noble Grossart, as well as Stagecoach founders Brian Souter and Ann Gloag.
