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Eco City Cuts Losses As It Sells More Parts And Licenses

28/09/2013

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Fri, 27th Sep 2013 12:08

LONDON (Alliance News) – Eco City Vehicles PLC, which co-develops and supplies Mercedes Vito taxis for the London market, Friday said it had cut its losses as sales rose in the first half of the year, but it also set aside more money to cover repairs to a legacy problem with its rear-wheel steering system.

The company’s taxis compete with the traditional London Black Cabs, but are facing competition from other new entrants into the market. Eco City said it has now captured about 10% of the 21,000-strong London licensed taxi fleet since it launched in 2008.

It reported a net loss of £263,000 in the six months to June 30 compared with a loss of £515,000 a year earlier. Revenues rose slightly to just under £17 million from £16.4 million.

Losses were cut even though it booked £506,000 in one-off items, up from £432,000 last year, mainly due to servicing and upgrading specific elements of the rear wheel steer system on older taxis.

Its gross margin increased to 16.4% from 13.9% as it sold more parts and licenses, which generate higher profits, and sold better quality used vehicles.

The company sold fewer vehicles in the period, down 13 to 299 compared with the year-earlier period, but it registered 4% more vehicles as it built up a fleet of newer taxis. However, the value of vehicles sold rose to £2.9 million, from £2.8 million, as it sold a higher proportion of more expensive Vito Euro 4 models.

However, it warned that it is still in talks with suppliers about sorting out previous problems with the rear wheel steering system and can’t be certain yet how the whole situation will be resolved. It has set aside a further £700,000 for upgrade programmes.

"Trading in the second half is in line with management expectations and demand for new vehicles was particularly strong in September, which achieved an all time monthly record for new Vito registrations. Gross margins remain firm and the parts supply business continues to see buoyant trading," the company said in a statement.

The stock was down 2.7% at 1.8 pence Friday morning.

By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1

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