Kader reduces its losses

[1andrew1]

Bachmann's parent company Kader published its 2023 results last month.

 

I think it's interesting to see that Europe (including the UK)  is Kader's largest market, that it continues to be loss-making  (last profitable year was 2018) and that permanent staff numbers have been reduced by a fifth.

 

Until I looked at the accounts, I would have expected North America to be its largest market. 

 

2023

• £38.20m turnover
• £7.5m loss

 

2022

• £36.09m turnover
• £8.7m loss

 

Notes

• Europe accounts for 46% of income, US 39%
• Rental income represented approximately 13% of the Group’s revenue for the year.
• Full-time staff numbers reduced from 1,009  in 202 to 817.

 

Source: https://www.kader.com.hk/investor_relations/pdf/press_240327_2e.pdf (HK $ converted to GB £)

 

[woodenhead]

Rather puts into perspective the challenge that Bachmann has whilst somehow still delivering very high quality models and expanding ranges such as 009 and NG7 now.

 

It's easy to sit at home demanding more models, quicker and with extra features without understanding there is a business trying to stay afloat and actually keep up with the likes of Accurascale.

Edited April 15 by woodenhead
Someone couldnt spell delivering last night

[maico]

A comparison of these Marklin-Trix turnover and profit charts is interesting. I didn't realize Bachmann are such minnows...

 

 

 

 

 

https://www.marklin-users.net/forum/posts/m669175-A-quick-look-at-Marklin-s-economics

Edited April 14 by maico

[pH]

1 hour ago, 1andrew1 said:

Until I looked at the accounts, I would have expected North America to be its largest market. 

Bachmann’s North American models are not as well-regarded in their target market as their UK ones are in theirs.

[YT-1300]

7 hours ago, pH said:

Bachmann’s North American models are not as well-regarded in their target market as their UK ones are in theirs.

That is very true, they are regarded as the 'toy' train market supplier there, although their newer releases such as the ACS-64 and Siemens Charger loco's and Venture coaches are stunning models well worth their asking price.

 

It's great to see they are reducing loss, I've always thought Bachmann UK's products are high-quality, very well finished and robust.

 

 

[1andrew1]

11 hours ago, pH said:

Bachmann’s North American models are not as well-regarded in their target market as their UK ones are in theirs.

Agreed but they've been going in the US for a lot longer and I thought that would be their largest market. Credit to their European/UK presence for being bigger.

[ThaneofFife]

Loss making even after ridding a 5th of the permo staff???

[spamcan61]

10 minutes ago, ThaneofFife said:

Loss making even after ridding a 5th of the permo staff???

indeed, and reading the Marklin-Trix thread posted earlier, they've reduced headcount by roughly 70% since 2004. 

[woodenhead]

11 minutes ago, ThaneofFife said:

Loss making even after ridding a 5th of the permo staff???

Depends when they let them go and how they accounted for any severance costs.

 

But depending on what those persons were earning it probably won't solve all the losses problem and still require more revenue and more profit per item sold.

[1andrew1]

15 minutes ago, ThaneofFife said:

Loss making even after ridding a 5th of the permo staff???

Worth comparing Kader's losses with Hornby's

- Kader's turnover £38.20m, generated a £7.5m loss 

- Hornby's turnover £55.1m, generated a £5.9m loss

 

Kader does own property so has a backstop although that's mainly in Hong Kong which is not performing amazingly at the moment. 

[woodenhead]

Here is a link to the financials.

https://www.kader.com.hk/investor_relations/pdf/press_240327_2e.pdf

 

It interesting to note that the model division made an operating profit last year, it in fact the company as a whole made an operating profit, it is the interest on loans, depreciation and reevaluations of properties that is dragging it down.

[G-BOAF]

Further interesting quote is

"The Group will strive to explore new sales opportunities and manufacture high quality products with competitive prices to sustain its business"

 

I sense the group will struggle in this strategy if Accurascale are selling a 37 for £170 and Bachmann's almost identical version is £245!

[34theletterbetweenB&D]

37 minutes ago, G-BOAF said:

I sense the group will struggle in this strategy if Accurascale are selling a 37 for £170 and Bachmann's almost identical version is £245!

But what perception of 'identical' : cheaper from an outfit I have not heard of, or more expensive from a well established brand that has been around for thirty years and which I can look at in my local model shop?  Hopefully the pricing decisions reflect a competent marketing approach.

 

There's still folk out there that only want 'Hornby' on the box, and I reduced the count of those that didn't know Hattons had shut down by two, in a conversation yesterday.Different world outside the online hothouse...

[spamcan61]

1 minute ago, 34theletterbetweenB&D said:

 

There's still folk out there that only want 'Hornby' on the box, and I reduced the count of those that didn't know Hattons had shut down by two, in a conversation yesterday.Different world outside the online hothouse...

Agreed, I still meet people to whom Bachmann are a radical left field choice.

Edited April 15 by spamcan61

[YT-1300]

1 hour ago, G-BOAF said:

Further interesting quote is

"The Group will strive to explore new sales opportunities and manufacture high quality products with competitive prices to sustain its business"

 

I sense the group will struggle in this strategy if Accurascale are selling a 37 for £170 and Bachmann's almost identical version is £245!

Not wishing to stir up a hornets nest, I find Bachmann's newer tooled products to be a higher quality than Accurascale, so to me they are worth their asking price.  

[34theletterbetweenB&D]

2 minutes ago, spamcan61 said:

Bachmann are a radical left field choice.

And how, yesterday's conversation was initiated with a Bach 9F (mine, purchased 2006) which I had brought alone to show a typical example of what is now available, and then mentioned that Hornby had their own fully competitive version. To which the response was 'Why didn't you buy that? Tedious explanation about the 17 year delay while Hornby 'caught up'.

 

Rapido Stirling single next...

[1andrew1]

2 hours ago, woodenhead said:

Here is a link to the financials.

https://www.kader.com.hk/investor_relations/pdf/press_240327_2e.pdf

 

It interesting to note that the model division made an operating profit last year, it in fact the company as a whole made an operating profit, it is the interest on loans, depreciation and reevaluations of properties that is dragging it down.

Good point that the operations made a marginal profit last year but if you just include the finance costs it still made a loss.
 

The company as a whole made a loss due to four things:

• Finance costs 
• Share of losses from associates
• Impairment loss from loans to an associate
• Deficit on revaluation of investment properties

[woodenhead]

11 minutes ago, 1andrew1 said:

Good point that the operations made a marginal profit last year but if you just include the finance costs it still made a loss.
 

The company as a whole made a loss due to four things:

• Finance costs 
• Share of losses from associates
• Impairment loss from loans to an associate
• Deficit on revaluation of investment properties

It made 6.3% profit EBITDA, whereas in 2022 it made an operating loss.

 

Cost of finance has increased significantly and it's still writing off assets which has eaten all that profit.

 

So the plan for 2024 will be to stabilise the borrowing and increase revenue to create a bigger EBITDA next year.

[G-BOAF]

57 minutes ago, YT-1300 said:

Not wishing to stir up a hornets nest, I find Bachmann's newer tooled products to be a higher quality than Accurascale, so to me they are worth their asking price.  

 

I'm finding equally challenging in quality. The only advantage of Bachmann, is there is normally stock available to send back for a return (TPO and a Class 47 both being recent examples where it has take 2-3 attempts to get one without decoration flaws). Accurascale by contrast, with so many models sold out on pre-orders is an unknown amount of time under repair....

[osbornsmodels]

Kader also manufacture model railway products for other independent (from Kader) companies based in the US and the UK but do we know what brands they are and how significant is that share of the group turnover?

[McC]

1 hour ago, G-BOAF said:

 

I'm finding equally challenging in quality. The only advantage of Bachmann, is there is normally stock available to send back for a return (TPO and a Class 47 both being recent examples where it has take 2-3 attempts to get one without decoration flaws). Accurascale by contrast, with so many models sold out on pre-orders is an unknown amount of time under repair....

 

For the sake of accuracy our warranty team have a dedicated stock allocated and can exchange models from that. Repair is an absolute last resort in any case. HTH. 

[1andrew1]

1 hour ago, osbornsmodels said:

Kader also manufacture model railway products for other independent (from Kader) companies based in the US and the UK but do we know what brands they are and how significant is that share of the group turnover?

I think this is hard to determine from the limited publicly available information available. I don't think Kader states its external customers' names anywhere nor breaks down revenue from external brands. I suspect its minimal as with production capacity constraints, it makes sense to focus on its own brands. 

 

Edited April 15 by 1andrew1

[woodenhead]

6 minutes ago, 1andrew1 said:

Certainly, with supply problems, I would expect Kader to prioritise its own brands over contracts for others. 

 

You don't look a gift horse in the mouth as they say!

 

A commissioned item is covered by the commissioner unless Kader agree to take a risk, so if a Rails or Kernow come to you and ask you to produce x model and they are paying for it then it's good business because it's not your risk, it's theirs and Kader will have their profit from the endeavour which feeds into their bottom line.  It's then down to the commissioner to sell the stock they paid for not Kader's.

 

If all your work was commissioned and paid for life would be so much easier for Kader.

[adb968008]

21 hours ago, 34theletterbetweenB&D said:

 

There's still folk out there that only want 'Hornby' on the box, and I reduced the count of those that didn't know Hattons had shut down by two, in a conversation yesterday.Different world outside the online hothouse...

I’ll raise you… I had a conversation the other day about Minitrix and Triang, someone thinking they were still Uk market leaders

Edited April 16 by adb968008

['CHARD]

14 minutes ago, adb968008 said:

I’ll raise you… I had a conversation the other day about Minitrix and Triang, someone thinking they were still Uk market leaders

 

Joueff: 'Hold my beer'