trouble ahead?

[tinywheels]

I stand by everything I said.
I would suggest I have been vindicated by recent events at brompton ,the newer model lightweights etc.
If the market for bolt on bits doesn't exist,then Kuosac, ridea, the other Taiwanese manufacturers et al must be worried. Not to mention the guys in this country, who provide a raft of interesting options.

 

[wafter]

There seem to be a large amount of wrong-ends-of-sticks being furiously grasped and dummies needlessly spat in this thread..

I don't think anyone's attacking Brompton, wishing them ill or casting aspersions on their future..

Has @tinywheels a bit of a limited perspective?

View attachment 673701
These are Brompton's turnovers and profits, starting in 1988 (when the MK2 was launched) until 2022. Financial year goes from April to March. So the peak in 2021 is basically the bike boom during corona as Brompton's financial year 2021 started in April 20 - pretty much when the bike boom started. Financial year 2022 again ends in March 2022. Judging from our collection of frame-numbers in the German forum Brompton may between April and December 2022 have built very roughly up to around 80.000 bikes.

You seem to have taken this thread personally and feel the need to vehemently defend the company to the hilt, even though nobody seems to be attacking them.

The articles linked to in my last post apparently explain the situtation sufficently - while perhaps not in dire financial straits they're suffering a downturn in profits despite exponentially growing turnover; which I don't think anyone can spin as a positive situation.

Your graph above illustrates this nicely. Clearly if this trend continues they will be in trouble, so it's noteworthy and something that needs addressing before it becomes problematic.


Again, the articles state that Brompton are looking to secure alternative sources of the parts they currently out-source to China and Taiwan due to growing instability in the region and the potential for future conflict to impact parts supply.

Just like every other bike manufacture Btrompton out-source a lot of parts from elsewhere (drivetrain, braking, wheels, tyres, finishing kit) so it makes sense for to protect their supply. Unlike a lot of other mainstream suppliers I believe they build thier frames in-house rather than subbing them out to third parties.. which makes them a cut above in this respect IMO. I don't think anyone's talking about this happening (yet - as long as they don't get into proper financial difficulty and decide to offshore the bigger bits to cut costs).

 

[tinywheels]

I originally queried if the current business climate might rock the brompton boat.
My own brompton experience bought into question their ability to recognise customer desire.
Rising costs plus other issues have caught a number of bike manufacturers with their pants down.
Hopefully brompton are nimble enough to avoid major problems.
The new facility outside Ashford is a major investment, planned before the current stormy climate.
Energy inflation and wage rises are major issues to overcome.
They must maximise all income streams.

 

[berlinonaut]

The articles linked to in my last post apparently explain the situtation sufficently - while perhaps not in dire financial straits they're suffering a downturn in profits despite exponentially growing turnover; which I don't think anyone can spin as a positive situation.

Not really. Because for one it spotlights at the current situation only in complete ignorance of historic and future developments and strategies and secondly it mixes up the actual situation regarding inflation with the financial data ending in March 2022, when the current inflation and other current effects were just starting or not even in sight. Still the media idiotically does this.

Your graph above illustrates this nicely. Clearly if this trend continues they will be in trouble, so it's noteworthy and something that needs addressing before it becomes problematic.

In 2022 Brompton had the second highest profits in the companies history. The highest were in the financial year 2021, caused by a one time effect: A boom of sales during covid while at the same time Brompton used the inventory stock they built up for Brexit to cope with demand and build bikes while delivery chains struggled. No wonder that they had a good cost structure that year and a massive rise in profits.
If you leave out 2021 the development is pretty impressive.
What's true is that the profits before tax in 2022 were "just" 6,8% of the turnover while they were 12,7% for 2021 and i.e. 10,6% for 2020. But on the other hand they have been as high as 26,6% in 1998 and as low as 3,9% in 2002 or 4,6% in 2016. Variation is just normal and it depends from a lot of factors. Rise in material cost and wages as well as investments in growth and R&D for example. Brompton currently has all four factors: They continuously stretch production, invest in new products (like the T-Line), invest in new markets like China, grow staff, invest in machinery by taking more processes in house and they have a rise in wages at the same time. This is not troublesome but a good sign as investment are planned and on purpose and hopefully will pay off later.
Inflation and issues with supply chains are another factor as is competition, especially through the cheap clones. If you read the financial statements from Brompton rather than the short sighted media coverage you'll get a way better picture.
What one can say for sure: It is very helpful that Brompton are not dependent from investors or the stock market. Because - as we can see from this thread - in a situation like the current one people go berzerk out of plain ignorance w/o any understanding of what's going on. Being a privately held company helps a lot here, as Brompton can do whatever they think is right w/o having to fulfill greedy short-term demand for profits of venture capitalists and the stock market.
For 2022 they did pay a dividend of GBP12 per share. The same amount per share they paid in 2021. Aggregating to GBP 1.180.000. They would not have done this if they thought they would be in trouble.

 

[berlinonaut]

I originally queried if the current business climate might rock the brompton boat.
My own brompton experience bought into question their ability to recognise customer desire.
Rising costs plus other issues have caught a number of bike manufacturers with their pants down.
Hopefully brompton are nimble enough to avoid major problems.
The new facility outside Ashford is a major investment, planned before the current stormy climate.
Energy inflation and wage rises are major issues to overcome.
They must maximise all income streams.

Possibly Brompton should hire you as an advisor - no doubt they have nothing of those topics in mind and w/o your advice they will be doomed.

 

[tinywheels]

Possibly Brompton should hire you as an advisor - no doubt they have nothing of those topics in mind and w/o your advice they will be doomed.

as their new buisness manager I would immediately appoint you.
I'm sorry if I made the mistake of thinking this was a bicycle forum dedicated to discussion of cycling matters.

 

[berlinonaut]

as their new buisness manager I would immediately appoint you.

Thank you, not interested.
The difference is: You already tried to bring youself into the game and have been rejected by Brompton:

I contacted brompton a while ago ref them starting a skunkworks type division. (...)
Their reply was no need we are doing fine.

I'm sorry if I made the mistake of thinking this was a bicycle forum dedicated to discussion of cycling matters.

Once more: Nothing against a factual discussion. But I still see no value in repeating the same willy-waving statements over and over that have already been discussed and disproved countless times as well as in short sighted statements that lack foundation and are based on wrong assumptions.

 

[tinywheels]

 

[u_i]

I'm sorry if I made the mistake of thinking this was a bicycle forum dedicated to discussion of cycling matters.

I must agree. Instead, we are getting content similar to that in British tabloids, alike to gabbling over beer.

 

[CaptainWheezy]

What I take from this is that I hope they've taken all this into account when planning the new massive building they have proposed. It looks to be very expensive, and I seem to recall them saying it was for production of a new as yet un-announced product which could turn out to be a complete flop.
It would be foolish of anyone to think that a one time boost in sales due to covid would be the new norm (see Peleton and Netflix for examples of this).
I hope they maintain a big cash surplus to ride out any storms, and it would be good to see them bring more component production in house

 

[Dogtrousers]

Funny thread. Everyone seems angry and disagreeing with each other, but I can't figure out what they are disagreeing about.

 

[berlinonaut]

It would be foolish of anyone to think that a one time boost in sales due to covid would be the new norm (see Peleton and Netflix for examples of this).

It's not that Brompton would have an issue in maintaining sales or sales growth. They are growing steadily and continuously and massively regarding the number of units sold - and the statistical turnover per bike goes up as well (statistical in the sense that these are not the bike prices but also everything else is included, from spare parts to accessories). One reason for that is the elimination of distributors in various countries, the start of direct sales through Brompton themselves and obviously a rise in the average price, of the existing bikes as well as through more expensive models like the Electric and the P- and T-line.

The ONLY thing is that absolute profits were lower for the financial year 2022 than for 2021 due to the profit margin being 6,8% instead of 12,7% in the year before. As said before: No reason to freak out. Normal, has happened before and will happen again.
In opposite: If you draw a trend line since WBA took over the lead of Brompton you see a slow but steady growth in margin:

And you also see, that variaton is not uncommon.


If you look at the financial statement you'll also see, that at the end of financial year 2021 they i.e. had parts stock of GBP 13.885.110 while at the end of financial year 2022 they had parts stock valued at GBP 25.201.997 - roughly double the amount and a difference of GBP 11 Mio (while the difference in profits between 2021 and 2022 was just GBP 2,3 Mio). Also, Brompton employed 200 additional staff in that financial year. And these are just two of a lot of factors that explain the difference in profit - there seems really no reason to be pessemistic.
All easy to spot if you read Brompton's financial statements yourself instead of hopping on the weirdo articles in the media or even easier on plain phantasy.

 

[CaptainWheezy]

The ONLY thing is that absolute profits were lower for the financial year 2022 than for 2021 due to the profit margin being 6,8% instead of 12,7% in the year before.

The issue isn't really just profit margins being squeezed, its that they're being squeezed at a time the company is planning huge capital investment.
I wish nothing but the best for Brompton (We have 5 so far in the household!), I just don't want to see them go the same way as so many other British manufacturers.
I also commend them for proactively seeking to move component supply away from China & Taiwan, however I think that doing so for the Electric bike may be impossible given Taiwan's major role in the semiconductor supply chain.

 

[berlinonaut]

The issue isn't really just profit margins being squeezed, its that they're being squeezed at a time the company is planning huge capital investment.

If they had had the same 12,7% margin in 2022 they had in 2021 they would have made profits of GBP 13,6 in instead of the GBP 7,3 Mio they made. A difference of GBP 6,3 Mio. The difference in materials stock alone ist way more than that - as outlined before GBP 11Mio more than in 2021.
But this is the past. There are no doubt demanding times ahead with inflation and the effects of the Ukraine war and other effects. These hit Brompton probably as much as the economy in general and we will see how this will turn out.