12.07.2017

JCB bounces back

JCB has announced a substantial rise in both revenues and earnings following several years of declining sales.

The company is privately held and as such does not release its full accounts, but it has announced that revenues increased almost 12 percent to £2.62 billion. At the same time the company says that Earnings Before Interest, Tax, Depreciation and Amortisation jumped 34 percent to £287 million.
The results follow several years of declining sales, and are the highest revenues since 2013. Pre-tax profits in 2015 were £102.7 million – which on the basis that all or most of the increase in earnings carries through – pre-tax profits would be in the region of 177.6 million.

Chief executive Graeme Macdonald said: “JCB’s strong performance in 2016 was against some economic headwinds which saw the global construction equipment market shrink. Some markets grew, such as India which rose by almost 40 percent, while others fell, including Brazil which was down by more than 40 percent. The UK market contracted by five percent in 2016 but the good news is that, after a difficult few years, European markets grew strongly and were up by more than 10 percent on last year.”

Chairman Lord - Anthony - Bamford added: “While we face challenges in some parts of the world, the global construction market so far in 2017 is buoyant and is expected to grow further during the remainder of this year. We continue to launch innovative new products and enter new sectors which will enable JCB to secure strong levels of growth in the future.”

“The UK market has got off to a particularly buoyant start this year, with housebuilding driving demand for compact and mid-range equipment, particularly telescopic handlers. In addition, there are some key infrastructure projects such as HS2 and Hinkley Point and Thames Tideway which are in the early stages of implementation, so customers are currently evaluating their fleet and machinery needs. Road improvements and widening schemes across the UK are also leading to increased demand for equipment.”

Vertikal Comment

This is a very encouraging set of numbers from JCB and also note that telehandlers played such a significant role in the improving sales. The company is exceptionally strong in India and is clearly benefiting from the ongoing strength of that market. Some of the increase will of course be currency related – given that a high portion - historically over 70 percent - of JCB sales are outside of the UK.

With Sterling remaining weak compared to most currencies we would expect JCB to post another good year in 2017.