Difficult trading period for Optare

Releasing its interim results for the six months to 30 September, Optare has revealed that losses have deepened and margins are down, while costs have risen.

It comes as it has still to win any orders for its new MetroDecker double-decker.

However, it reports that the first order for Euro 6 Solos and Versas, for 37 buses, has been delivered to Translink in Northern Ireland.

It also says that it has increased its share of the UK single deck market by 2%, despite the overall market being down by 9%.

The financial headlines are earnings before interest, tax, depreciation and amortisation (EBITDA) showing a 1.4m loss compared with a 0.8m first-half loss in 2013.

Its loss from operations is 2.1m (2013: 1.4m loss) and its gross margin fell from 10.3% to 9.5%. “This was primarily driven by the execution of new product orders and the introduction of new Euro 6 specification vehicles,” says Optare. Sales volumes are 13% down.

Underlying administration costs increased to 4.6m (2013 4.4m), including a one-off 300,000 charge “relating to obligations resulting from an onerous contract in May 2014,” which is thought to refer to a penalty clause.

Says Optare CEO Enrico Vassallo: “We have seen a difficult trading period in the first half of the 2014/15 financial year, due to the contraction of the UK bus market and the launch of several new products and Euro 6 specification vehicles.

“The management is committed to top-line growth in both UK and export markets and to reduce fixed costs to ensure a long term sustainable future.”