JCB reaps reward for 'tough action' as profits show a rise

JCB posted an increased profit for 2009 despite seeing sales fall by a third after the global construction equipment industry suffered its "deepest ever recession".

The heavy machinery group saw sales fall by 33 per cent to 1.35bn but the group pushed up pre-tax profit by 1m to 29m.

It sells in this region through dealer TC Harrison JCB, one of its longest-serving dealers, which has bases in Sheffield, Garforth, on the edge of Leeds, and Lincoln.

JCB, which is based in Staffordshire but exhibiting at Great Yorkshire Show this week, said it expected to see a "significant improvement" in both sales and profits during 2010 as the market for its machines improved.

It said the construction equipment industry had seen a strong recovery in emerging markets, such as India, Brazil and China, during the first half of the year, although Western Europe and North America remained weak.

Sir Anthony Bamford, the chairman, said 2009 was "hugely challenging" for the construction equipment industry.

"Tough action was taken to adjust our cost base to align it to a much reduced level of demand, and this resulted in an improving profit trend as the year progressed."

It made 1,800 workers redundant during the year and introduced a reduced working week of 34 hours for a period of six months in order to limit job losses. Workers also took a week of unpaid leave in September.

JCB has since started recruiting again and resumed overtime. Now it employs 7,000 people worldwide, including 4,000 in the UK.

TC Harrison JCB said it maintained profitability in 2009 despite the global construction equipment slump. Sales dropped by a third to 32m but was still able to maintain a profit due to making cost reductions. New machine unit sales have since picked up strongly in the first half of this year.

The Bamford family-owned firm sold a total of 36,000 machines during 2009, increasing its market share to a new high of 12.2 per cent and reinforcing its position as the world's third largest construction equipment manufacturer.

It also improved its market-leading position for backhoe loaders, which account for more than 40 per cent of global sales, and embarked on a 20m investment in a new generation of the machine – which has an excavator arm at the rear and a shovel at the front – to produce a new eco-range.

The two new models, which use up to 16 per cent less fuel than their predecessor and start at 40,000, go into full production next month.