Better margins at Optare, though losses increase

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Company successfully increases gross profit margin to 13%, but investment in new products increases losses to £4.765m

Optare has released financial results for the year ended March 31, 2015.

Revenue increase to £57.8m (2014: £56.9m) while cost of sales dropped to £50.2m (2014: £50.8m), resulting in a gross profit of £7.534m (2014: £6.121m).

However, a number of other factors resulted in an increased loss of £4.765m (2014: £4.061m). Administrative expenses increased from £8.039m to £10m, loss from operations increased from £3.041m to £3.632m and finance costs went up from £1.020m to £1.133m.

Pre-exceptional EBITDA losses were reduced to £1.6m (2014: £1.9m).

Optare highlighted that there were £0.5m of exceptional costs in the year’s accounts and the firm’s gross profit was 13% of its turnover, a superior margin to the 10.7% achieved in the previous financial year. The company said a ‘considerable investment in new products’ was the reason for the 17% detraction.

Optare also received further investment from parent company Ashok Leyland, in the form of a £1.5m loan.

Enrico Vassallo, CEO, commented: “2014/15 represented an important step forward for Optare plc in terms of long-term growth through investment in product development and the recovery of group sales in our major market – the UK.

“I am pleased to report that Optare plc has maintained its market share in the domestic market and has increased international sales by 5%.

“We are already seeing signs that the launch of the new Metro range of vehicles is serving to strengthen our market position in the UK. We continue to focus on cost reduction and our business processes to drive continuous improvement and the highest quality product. Overall we anticipate progress in 2015/16 towards a satisfactory performance, with increased sales of electric vehicles and growth in Australia, Europe and the Middle East.”

In a separate development, Robert Drewery has been appointed as Optare’s Commercial Director with effect from August 24, 2015.

Robert has over 15 years of national and international sales and marketing experience gained within the bus and commercial vehicle industries at a senior level. His career in the commercial vehicle and bus industry started with Leyland Daf, followed by the role of business development director of the truck maintenance company, Pullman Fleet Services.

More recently Robert led the Wrightbus sales team to win a number of major UK and international contracts supplying Wrightbus products.  Robert also oversaw the introduction and support of the New Routemaster.

Enrico Vassallo said: “Robert brings with him a wealth of global sales experience in the bus and commercial vehicle industry. Robert’s appointment will strengthen the commercial team and support the company in achieving national and international growth.”