Ashok Leyland's UK unit turns around loss trend

Last Updated: Sun, Dec 23, 2012 09:31 hrs

The firm's non-executive chairman stated the group is now positioned to increase UK and export sales in both retail and fleet segments

Optare Plc, the UK-based bus manufacturing unit of Ashok Leyland Ltd, has seen profit in the September quarter after the company initiated a major turnaround plan this year, according to a top official.

The company is also planning to manufacture vehicles from Ashok Leyland's Ras Al Khaimah facility in the United Arab Emirates to strengthen its position in West Asia, an important target market for the firm outside the UK.

"The board (of Optare) anticipates that the second quarter (July to September) has seen the company achieve a positive Ebitda (earnings before interest, taxes, depreciation, and amortisation) for the first time following the execution of the key turnaround actions," said John Fickling, non-executive chairman of Optare.

While the second quarter numbers were not available, the company's regulatory filing stated that losses reduced by 54 per cent from 2.54 million euro (around Rs 23 crore) in the first half of FY11 to 1.18 million euro in first half of FY13.

These losses were incurred during the April-June 2012 quarter, before the company executed its turnaround plan, which saw Optare closing its factory at Blackburn in the UK, completing the sale of its site in Rotherham and ramping up sales.

In a regulatory filing, Fickling said the company continued to invest in new factory and product developments and the group was now positioned to increase its sales in the UK and abroad.

Order book at the end of September stood at 19.4 million euro. This current lower level of order is in part a reflection of the shorter lead-times being achieved at the new factory in Sherburn.

Optare is also awaiting news on the UK Group tenders for 2013 which are planned to be announced in coming months.

The company also expects to put its first mechanical hybrid bus into service with a major operator in the second quarter of 2013.

"The investments in developing electric buses are well-timed and we now have a substantial lead on the competition," according to Optare.

"With increasing fuel costs, along with more costly and complicated technology needed to reduce tail-pipe emissions, electric buses make increasing commercial sense and offers a key growth opportunity," said the company.

On the outlook, the company said notwithstanding the current poor economic sentiments, the board anticipated an increase in UK demand, particularly for single deck buses in 2013 and 2014.

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