Kader YE financial results

[adb968008]

http://www.kader.com/investor_relations/pdf/press_180328e.pdf

 

Wow, very profitable year, a very healthy set of numbers.

 

Revenue up 9% to $823m HKD

 

Gross Profit 265% increase upto $327m HKD up from $123m in 2017 (inc $57m in buildings)

 

Staff costs reduced to $232m HKD from $239m HKD.

Minor increase in inventories and trade receipts over 6mths.

 

 

8% revenue growth in Europe ($171m HKD up from $159m HKD) and 9% revenue growth in North America up to $587m HKD from $525m HKD)

 

Dividend payments up from $19m HKD from $14m HKD.

Further Positive outlook predicted for 2018.

 

The gross profit for 2018 at 327m HKD is approx 39% gross margin, and nearly double all Europe’s revenue of 171m HKD !

 

Given the sloop of bad news so often associated with the financials of the hobby in the UK and Europe it’s good to see

 

£1= $11HKD at today’s rate. (For ease divide by 10)

Edited April 3, 2018 by adb968008

[34theletterbetweenB&D]

Looks like their recovery plan to slim down the organisation and charge prices that make the business profitable has done the job. (We shouldn't forget they were deeply in the red ink only about five years ago.)

[Enterprisingwestern]

Cue moaners complaining about excess profits and expensive models!

 

Mike.

[MRDBLUE17]

Looks a decent set of results and it’s good to see given the current trading patterns everywhere. It will help to keep us with quality models going forward.

 

Cheers

Mark

[The Stationmaster]

The interesting bit, and more relevant to us of course, will be when the Bachmann accounts appear in July or thereabouts.  Hopefully they too might be moving towards, or getting into, profit.

[34theletterbetweenB&D]

The interesting bit, and more relevant to us of course, will be when the Bachmann accounts appear in July or thereabouts...

The Europe revenue at just over 20% of the Kader total does much to explain the slow down in UK product from this manufacturer. To obtain the recovery into the healthy gross profit achieved, it has to have been the North American market product that got the priority.

 

Hope that people are not misled over the gross profit, as for a start that is before any tax. Much of the net profit will be either reinvested in new tooling to create new product introductions, or held in reserves. The dividend is the indicator of health, and a little over 2% of turnover is modest.

[NIK]

http://www.kader.com/investor_relations/pdf/press_180328e.pdf

 

Wow, very profitable year, a very healthy set of numbers.

 

Revenue up 9% to $823m HKD

 

Gross Profit 265% increase upto $327m HKD up from $123m in 2017 (inc $57m in buildings)

 

Staff costs reduced to $232m HKD from $239m HKD.

Minor increase in inventories and trade receipts over 6mths.

 

 

8% revenue growth in Europe ($171m HKD up from $159m HKD) and 9% revenue growth in North America up to $587m HKD from $525m HKD)

 

Dividend payments up from $19m HKD from $14m HKD.

Further Positive outlook predicted for 2018.

 

The gross profit for 2018 at 327m HKD is approx 39% gross margin, and nearly double all Europe’s revenue of 171m HKD !

 

Given the sloop of bad news so often associated with the financials of the hobby in the UK and Europe it’s good to see

 

£1= $11HKD at today’s rate. (For ease divide by 10)

 

Hi,

 

I find it interesting that staff costs have gone down slightly.

 

I thought increased staff costs were one of the main reasons Bachmann Europe cited for the large price rises in the last year.

Perhaps they have scaled back production and have reduced the workforce to match.

 

Regards

 

Nick

[34theletterbetweenB&D]

...I find it interesting that staff costs have gone down slightly...

 Quite what that represents in terms of employee headcount is unknown. With the very large annual turnover of assembly staff that is typical in China, there would be no difficulty in reducing headcount and thus the employment cost very significantly, year on year. I would expect continuing effort in product design simplifications and production automations to effect productivity gains, as normal in manufacturing process management.   

 

It is no secret that Kader made a large scale workforce reduction when closing down the former Sanda Kan operations some years ago, and the lessons from that are unlikely to have been forgotten. It all becomes a lot easier when an operation scales down to 'just a regiment' instead of an army...

[Legend]

Cue moaners complaining about excess profits and expensive models!

 

Mike.

Yep. Shows the effect of large Bachmann increases in price over the last 5 years, particularly the first three. Staff numbers reduced , but no sign of the huge increase in labour costs that have been attributed to China.

 

But at the end of the day prices are what they are. You buy or not . Looks like Kader doing very well.

[The Stationmaster]

 Quite what that represents in terms of employee headcount is unknown. With the very large annual turnover of assembly staff that is typical in China, there would be no difficulty in reducing headcount and thus the employment cost very significantly, year on year. I would expect continuing effort in product design simplifications and production automations to effect productivity gains, as normal in manufacturing process management.   

 

It is no secret that Kader made a large scale workforce reduction when closing down the former Sanda Kan operations some years ago, and the lessons from that are unlikely to have been forgotten. It all becomes a lot easier when an operation scales down to 'just a regiment' instead of an army...

 

The employee headcount is given in the report - it reduced by 27 people 2,079 in 2016 down to 2,052 in 2017 but it isn't at all clear to what extent that figure takes into account seasonal changes (it probably isn't a peak headcount?) and it covers their operations across the entire world so the reduction in numbers and costs could as easily have been in the USA or Europe as it could in a factory in mainland China.

 

What is clear is that the company has turned round significantly from what was - only a few years ago - a substantial loss on 'toys and model trains' to a substantial profit.  While this year's Bachmann figures have yet to emerge what has happened thus far is that profit in Bachmann Europe was reduced  by effectively transferring it to Kader's part of the process.  Thus Kader went from making a loss on Bachmann's UK outline models to making a profit on them by increasing the sale price to Bachmann which in turn increased the UK retail price, so not necessarily just an increase in staff costs (which was happening in parallel) but also a relocation of the point of profit within the overall Kader Group.  It will be interesting to see if Bachmann Europe managed to return to profitability in 2017 after its loss making situation in 2016?

[Ian_B]

Yep. Shows the effect of large Bachmann increases in price over the last 5 years, particularly the first three. Staff numbers reduced , but no sign of the huge increase in labour costs that have been attributed to China.

 

But at the end of the day prices are what they are. You buy or not . Looks like Kader doing very well.

 

You need to remember that Kader make a lot of different products of which Bachman Branchlines is but a small part.

Manufacturing operations are divided into two categories, the contract manufacturing of goods for the brand/design owner (such as Disney Hasbro and Mattel and electrical goods housings for National Panasonic) and manufacturing of precision model railroads designed and marketed by Kader group companies around the world. 

[Ouroborus]

Hmm. I can't help but ponder what would have been said if the accounts had shown a large increase in labour costs. I suspect that it would have been a good chunk of "I told you so". As it's gone the other way with a neglible reduction in staff numbers, we're having other 'explanations' put forward. It just goes to show something that I've always suspected - we just don't know - it's all speculation.

Edited April 8, 2018 by Ouroborus

[Butler Henderson]

The Europe revenue at just over 20% of the Kader total does much to explain the slow down in UK product from this manufacturer. To obtain the recovery into the healthy gross profit achieved, it has to have been the North American market product that got the priority.

I understood a number of years back than the US market dominated Kaders model railway production and the factory basically jumped to fulfil any US order at the expense of the European production and hence the delays in Bachamnn Brachline models

[Andy Mac]

Hmm. I can't help but ponder what would have been said if the accounts had shown a large increase in labour costs. I suspect that it would have been a good chunk of "I told you so". As it's gone the other way with a neglible reduction in staff numbers, we're having other 'explanations' put forward. It just goes to show something that I've always suspected - we just don't know - it's all speculation.

Kader instructed Bachmann a few years ago to increase their profit margins to a similar level as to other parts of their model railway business....it was announced about the time Graham Hubbard retired if my memory serves me right...

[The Stationmaster]

Hmm. I can't help but ponder what would have been said if the accounts had shown a large increase in labour costs. I suspect that it would have been a good chunk of "I told you so". As it's gone the other way with a neglible reduction in staff numbers, we're having other 'explanations' put forward. It just goes to show something that I've always suspected - we just don't know - it's all speculation.

 

No need to speculate at all.  Kader were losing money on the product they sold to Bachmann - the accounts showed that.  Kader were losing money in their 'toys & models' segment as a whole - their accounts showed that. Chinese labour costs (not just wages) have increased massively - matter of public record.  Many in the trade in the UK were of the view that Bachmann was underpriced for what it was delivering and could stand a price increase.  Some UK deep discounters were giving a misleading impression of real prices when they were  prepared to virtually giveaway locos and take minimal profits on other items.

 

Add all those changes together and there is a simple result, Bachmann prices have increased for a combination of reasons - no speculation, just know facts that have been in the public arena for some time for those who bothered to look.  Noticeable result from Kader's own accounts over a period of several  years - they have moved from large losses in their 'toys & models' segment to decent levels of profit (although it's possibly still questionable when measured against total amount capitalised?).

[jjb1970]

Good work by Kader, a healthy balance sheet and profit from making models is the best guarantee that they'll continue and keep making them. Kader seem to have been clever enough to adopt some of the principles of "design clever" in a way which their customers are happy to accept and without shouting about it (i.e. designing in ease of manufacture, using moulded detail where it works) and they appear to be managing their businesses well. As somebody above has noted, we don't know the full story behind all the gossip we get, things like rising labour costs are a simple and easy to comprehend aspect manufacturers can point to but that is clearly only one part of a much more complex set of factors but if Kader are doing well and people believe their product is worth buying and worth the cost then that's all that really matters.