ALBION Automotive has reported a 24 per cent slump in turnover as it cited the impact of new European regulations on diesel emissions for trucks and buses.
Glasgow-based Albion, which manufactures axles for buses, trucks and cars, booked turnover of £30.4 million in the year ended December 31, down from £39.9m the year before.
The company, owned by the Detroit’s American Axle & Manufacturing (AAM) Holdings, highlighted the impact on sales from the “implementation of environmental upgrades with the Euro 6 introduction” in accounts newly filed at Companies House.
Euro 6 is the latest iteration of European Commission regulations which define emissions standards for heavy-use vehicles such as buses and trucks.
Albion, which makes and assembles crankshafts and vehicle and engine components as well as axles, saw turnover fall in its core UK market and in the exports arena. UK turnover slid to £25.7m from £33.1m, while sales abroad dropped to £4.7m from £6.8m.
While sales dropped at Albion, the accounts show that the company narrowed pre-tax losses to £3.9m from £4.7m in 2013.
“A change in the mix of business resulted in a gross loss of £416,000 (2013 gross loss £382,000),” the company states in the accounts.
“This was due to a change in the mix where there was growth in the truck axle and passenger car markets and a reduction in the construction vehicle and bus markets.”
Albion notes in the accounts its progress in managing its cost structure, and states that its introduction of “lean manufacturing systems” in 2013 has enabled it to “continue to eliminate waste and cost whilst ensuring there is no impact on quality.”
The company added: “These further improvements in cost structure will improve margins for future years. This allows the company to be more competitive and pursue more business in the truck and bus axle markets.”
The company, based in Scotstoun in the west of Glasgow, also highlighted the importance of research and development to its operation. It invested £558,000 in R&D during 2014, down from £614,000 the year before, and signalled its intention to continue to maintain expenditure in this area.
Noting that R&D is carried out “in pursuit of the development of new products, improved quality, competitiveness, performance and profitability”, it added: “We plan to continue to invest in the development of new products, processes and systems in order to improve efficiency and flexibility for our customers.”
However, the company used the accounts to highlight the risk presented to the automotive industry from global events.
“The automotive industry has continued to improve over the past five years after suffering the effects of the global economic crisis in 2008 and 2009,” it stated in its review.
“Although we are seeing improvements in the market there are risks due to political events, potential domestic and international terrorist events.
“These events may risk turmoil in the European credit markets which poses a threat to growth and market stability, which could have an adverse impact on the automotive industry.
“As we continue to look to expand our business we need to anticipate and effectively manage these and other risks.”
Albion saw its average employee headcount drop to 155 during the year from 174 in 2013, with overall staff costs dropping to £4.9m from £5.6m. Directors’ emoluments increased to £179,000 from £135,000, the accounts state.
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