Taxi cab-maker Manganese Bronze has posted a £600,000 half-year loss after being hit by nervous cabbies who are reluctant to splash out.
Adverse economic conditions were blamed for the slump, which came a year after making a six-month profit of £1.5 million.
The company saw a sharp fall in demand across the period, as vehicle sales fell 11.5 per cent, to 1,035 cabs.
However, the Coventry-based firm revealed it had drastically reduced its net debt, from £7.2 million to £3.6 million, across the six months to July.
It is pinning its hopes on its Chinese joint venture to boost international sales while returning the UK business to profitability.
Manganese has axed 20 per cent of its staff at London Taxis International headquarters in Coventry in the last year. Employees have also agreed a 10 per cent pay cut.
But group chief executive John Russell was upbeat about the performance across the period, which included the start of commercial production of its TX4 model at its Shanghai plant.
He said: “We are pleased with the further progress we have made with our joint venture in Shanghai during the first half of the year and are delighted that, having now passed the appropriate approval processes, production has commenced and orders are being fulfilled to satisfy an encouraging level of worldwide interest received for the world famous London taxi.
“UK sales performance continues to be challenging as drivers’ confidence to commit to the purchase of a new taxi remains weak.
“We are now focused on fulfilling the international sales opportunities for TX4 and returning the UK operation to profitability. The successful implementation of these actions will realise our vision to make the London taxi a successful global icon and deliver a marked improvement in our future profitability.”
Manganese added that margins had also been squeezed by discounting from taxi dealers and the strength of the euro, as it imports engines from Italy.
But the firm has shored up its balance sheet and cut debt with a £9.4 million rights issue and has also seen a boost from the Government’s scrappage scheme, which led to orders for 81 cabs so far.
Meanwhile the company hopes to sell about 1,000 cars in China this year, with its joint-venture partner lobbying local government and taxi operators to adopt the Shanghai-produced model.
The business was hit last year with a spate of engine fires for the TX4, which forced it to recall and refit almost 6,000 cabs at a cost of £3.8 million.
Shares in the group remained unchanged, at £2.15, yesterday.