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McConechy's chief upbeat as profits driven up

INDEPENDENT tyre and exhaust fitter McConechy Holdings has seen a 51% surge in profits in spite of a dip in sales.

PLANS: Donald Carmichael has said McConechy is looking to expand its online offering. Picture: Colin Mearns
PLANS: Donald Carmichael has said McConechy is looking to expand its online offering. Picture: Colin Mearns

Accounts being filed at ­Companies House this month will show turnover at the Ayr ­business, which operates from 50 branches across Scotland and Yorkshire, fell 9.5% from £43.36 million to £39.24m in the 12 months to April 30, 2013.

McConechy trimmed its sales costs from £28m to £25.3m with administrative expenses also falling from £14.4m to £13.5m.

Finance charges were down from £829,165 to £656,166 as the company shaved more than £3.3m from its net debt. The figure stood at £9.4m at the end of the year.

A gain of £841,915 relating to a sale and leaseback of some branches was recorded in the accounts.

That gain, coupled with the lower finance charges, saw pre-tax profits come in at £863,464, up from £571,777.

Donald Carmichael, managing director, said: "It has been difficult for a number of years and it is good to see some positives coming through."

In the current trading year Mr Carmichael indicated there had been a clear upturn in business from the commercial sector.

He said: "It has been a long slow process but I would say our optimism is greater than it was last year, which is good.

"It is early days but we would see that it is encouraging there is greater economic activity.

"It is not so much replacement parts on trucks but it is replacement tyres which means they are running more kilometres and that is a bit of a bellwether on the economy."

Consumers are still said to be "price sensitive" but Mr Carmichael has been encouraged by the performance of an online e-commerce platform.

He said: "We now have our own online offering where people can go 24/7 to buy tyres from us and that is developing quite nicely. We are also interested to see that visits to our website in January are up 11% which is a real good indicator of activity out there."

Mr Carmichael said the company was looking into ­expanding its online offering to include ways to buy other services such as MOTs.

McConechy has opened one new location since the end of its financial year by taking on a former ATS Euromaster site in Kirkwall on Orkney.

Mr Carmichael said the company remained open minded about acquisition possibilities although there was nothing specific it was pursuing.

He said: "We are not aggressively looking for opportunities but if something comes along that is of interest we will look at it."

A target of further profitability and debt reduction in the current financial year has been set.

Mr Carmichael said: "I would expect the debt to come down further through normal cash generation and trading. That will continue to consolidate and improve our position."

Notes to the financial statement for 2013 show staff costs were trimmed from £8.8m to £8.1m with average employee numbers down from 275 to 348.

Mr Carmichael said there had been no formal redundancy process carried out but the company had looked to match wage costs to the lower turnover.

He said: "We have tried ­wherever possible to maintain staff [numbers]."

Directors' remuneration rose from £323,427 to £344,318 though the highest paid saw their pay package dip from £196,182 to £191,913.

Hector McConechy founded the firm in Ayr in 1956 and it is now chaired by his son Derek.

The most recent annual return said Mr Carmichael is the group's only non-family shareholder.

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