Production problems with Manganese Bronze’s new London taxi, combined with losses in the group’s components activities, have dragged pre-tax profits down by 27% in the six months to the end of January this year.
The vehicles and engineering group said quality problems with the new taxi have led to substantially higher warranty costs, while margins were hit when production was cut back from 80 to 64 taxis per week in November, involving redundancy costs of £380,000.
Turnover on taxi sales was up 30% to £39.7m, but like-for-like operating profits fell from £3.16m last time to £1.98 in this period.
The components division reported sales down 22% to £12.9m and showed a loss of £443,000, mainly at the group’s sintering business.
Chairman Hugh Lang said the group had cut costs to match levels of demand. ‘We expect better results in the second half year, though profits are likely to be lower than in 1998,’ he added.
The shares closed 10p lower at 208.5p.