Axle Group See Profits Double on Flat Sales

Axle Group Holdings Ltd, which owns National Tyres and Autocare, has reported that profits nearly doubled to £5.8 million in the financial year to 31 December 2009, despite turnover remaining flat at £153.1 million. The latest accounts to be filed show that much of the company’s improved profitability came through £3.6 million worth of cuts in “administrative expenses” to £53.6 million, while distribution costs fell £400,000 to £6 million in the year. However, according to reports in Crain’s Manchester Business, a 106-person drop in staff count to 1,238 during the year, reduced the wage bill by £2 million to £26 million. However, in addition to reduced head count there is also evidence of thriftiness in the boardroom. The accounts, which inlcude the Viking tyre wholesale subsidiary, show the company's highest paid director, which Crain’s speculates is Revie, earned £763,907, roughly a third of the £2.1 million the company’s highest paid director received the previous year. Total boardroom pay for the four directors fell sharply as well, down £2.65 million to £1.4 million from £4.05 million the year before. The company's net asset value reportedly rose to £55 million, from £49 million the previous year.

Axle Group may have bucked downward sales trends in the wider industry and increased overall profitability, but National Tyre like Britain’s two largest tyre retail chains (Kwik-Fit and ATS Euromaster) look like it could not fulfil its expansion ambitions in 2009. In April 2008 that the group planned to invest more than £12 million in adding 115 new branches to its network, which then stood at 205 depots. The new openings would help the company catch up with Kwik-Fit and ATS. However, with ATS Euromaster having closed between 80 and some sources say 93 branches this year the gap is narrower than ever.

At the time the plans were announced, the company said they would be paid or without additional borrowing and would add 500 new jobs to the workforce, which then stood at 1,400. Now that headcount is nearly 200 short of the starting mark, it appears that the scale of these plans was reduced last year. That said, company representatives told Tyres & Accessories they opened six branches in 2009, with a seventh coming in January 2010.

Still the clearest news is that Axles Group’s increased profitability continues on a positive curve as it has down through the current incarnation of the business. The company had annual losses of £44 million when chief executive Alan Revie led a management buyout in 2001 from Continental. By 2007 turnover at National went over £100 million for the first time and profits more than doubled to £3.3 million. In this context profits of £5.8 million look pretty good.

Related News:

• National Opened 6 Branches in 2009, Next Opening: January 2010

• Revie Bought National Tyre Sites in £49 million Deal

• Reports: Axle Group Recorded £3.2 million Operating Loss in 2008