Decisive action early in the downturn has put Shropshire upmarket cooker manufacturer Aga Rangemaster in a good position to weather the recession, chief executive William McGrath said.
The Leamington company, which makes cast-iron cookers at its 300-year-old site at Coalbrookdale, said its cash position was strong and expected to improve further in 2009.
It has cut 400 jobs – 12 per cent of its workforce at the start of 2008 – as part of plans to reduce annual costs by more than £6million.
The group, which employs 3,100, said in a trading update yesterday its second-half operating profits were “appreciably below” the £9million achieved in the first six months of 2008.
The sector has come under pressure during the property slump, as fewer home sales reduce demand for “big-ticket” items.
A spokeswoman said some posts went through natural attrition but she would not give a breakdown of redundancies after an autumn consultation process.
Operating hours at the Rangemaster factory in Leamington Spa, Warwickshire, have been cut, with sales of Rangemaster cookers down to 68,000 in 2008 from 76,000 in 2007. The working week at Coalbrookdale remains the same.
“We have acted decisively in response to the changing market conditions,” Mr McGrath said. “Our sound finances, strong UK manufacturing and customer bases, with export opportunities assisted by currency movements, give us confidence we will emerge from the current challenging trading environment with strengthened market positions. Our business has origins in cooking and home heating that can be traced back 300 years and which provide the perspective to see that quality and innovation succeed across economic cycles.”
Aga said it has implemented plans to make £6million annual savings to cope with the tighter consumer environment, including the move of its headquarters to Leamington Spa.
Its cast iron cooker lines benefited from product development as customers traded up to larger, programmable models, while wood-burning cookers performed strongly in a year of soaring gas and electricity bills.
The group’s homewares brands Fired Earth and Divertimenti faced weak markets in the second half, although they saw a better December than the previous year.
Aga said its focus for 2009 will be to continue to make the most of its investment in product development, routes to market and production efficiencies.
Analysts from Numis Securities said in a note: “Although Aga comprises a strong stable and management is acting effectively to cut the cost base, selling big-ticket items for the home, it is stuck in the eye of the recessionary storm.”
Aga Rangemaster shares closed 6.5p or 11 per cent down at 55.25p. The company is due to report its results for the year to December 31 on March 13.
* Aga Rangemaster is celebrating 300 years of casting iron at Coalbrookdale in Shropshire, birthplace of the Industrial Revolution.
The company, now based at Leamington, is the descendent of Allied Ironfounders which began making cast iron cooking pots using ironmaster Abraham Darby’s revolutionary method of smelting iron ore with coke instead of charcoal in 1709.
The significance of Darby’s innovation was that it freed the iron industry from the need to be close to sources of water and timber, which is why the industry began in the steep wooded valley of Coalbrookdale.
Aga slowly developed from making cooking pots into producing solid fuel fires and cast-iron ranges.
After the Second World War, the company launched the famous Aga and Rayburn cookers, which are still produced only at Coalbrookdale for export throughout the world.
Today, the company’s foundry manager at Coalbrookdale is the 32nd successor of Abraham Darby himself.
Allied Ironfounders celebrated its 250th anniversary in 1959 by excavating the remains of Darby’s original furnace and establishing a Museum of Ironfounding that today is run by the Ironbridge Gorge Museum Trust.
Aga is marking this year’s 300th anniversary with a limited edition cooker in three colours and with new cast-iron cookware lines carrying the original Coalbrookdale trademark.
Aga and Rayburn owners will be able to sign up for conducted tours of the site and the company plans to track down all of its products still in operation today.
William McGrath, chief executive of Aga Rangemaster, said: “The Aga foundry in Coalbrookdale is the birthplace of industry. We should celebrate the historical importance of our cast-iron cooking pots and show how with Aga and Rayburn we are still innovating British-made products with international significance.”