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18.05.2015

JCB slips back

JCB has reported a six percent fall in revenues to £2.51 billion, while earnings before tax, interest and depreciation declined almost seven percent to £292 million, although this does include £11 million of restructuring charges.

JCB is privately held and has yet to file its full accounts. Pre-tax profits last year were just under £211 million.

The company blames the decline on sharp falls in developing markets, such as India, Brazil, Russia, and China, partially offset by a 23 percent rise in North America, which is now the company’s third biggest market behind India and the UK.

Chairman Anthony Bamford said: “For different reasons each of the ‘BRIC’ markets of Brazil, Russia, India and China were sharply down in 2014. However, the broad spread of our business enabled us to benefit from better conditions in North America, Western Europe and particularly the UK.”

“Global market uncertainty has continued into 2015, though our home market of the UK remains a rare bright spot. The need for infrastructure in much of the developing world remains acute and will eventually drive a resumption of growth. Our resilient performance in 2014 demonstrates we are well placed to capitalise on improving trends as they emerge.”

Vertikal Comment

JCB is unusual in that an unusually large portion of its revenues comes from developing markets, and this it is more affected by slower growth in places like India and Brazil, than others. This is at least the fourth year of small declines in sales, with 2014 coming in around eight percent below 2011 when the company achieved £2.72 billion.

However the substantial rise in North American sales, while probably driven partially by exchange rates is notable, in that JLG dominates the telehandler market there, while companies such as Caterpillar have a firm hold on earthmoving equipment. So progress of this magnitude is significant.

Expect the company to at least hold its position in 2015, and do even better in a year or two when growth gathers steam in both developing and developed markets. In the meantime as a private company JCB continues to invest and expand its operations.

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