Tandem bikes sees profits double

Tandem is firmly in the black

UK bicycle maker Tandem has seen profits double after responding to demand for more expensive bicycles.

Its push into posh markets lifted profits in the year to the end of March to £1.2m, against £609,000 previously.

The maker of Dawes and Falcon bicycles has pulled out of the low-profit budget market. Tandem shares jumped in London.

But a worldwide shortage of components used to make upmarket bicycles caused Tandem's total sales to fall to below £53m, from almost £57m last year.

Clear targets

Both Dawes and Falcon sales suffered.

Tandem Group's pre-tax profits: 2004/5: £1,200,000 2003/4: £609,000 2002/3: £234,000 Check Tandem's share price

"I regret that we fell short of what was possible," Tandem's group chairman Graham Waldron said.

He added that "notwithstanding the profit increase" the company's board of directors was "disappointed with the overall result".

"Profitability in 2004 was below potential," said Mr Waldron.

"We have to improve and changes are being made around our group with the introduction of new operating standards with clear targets that will demand better performance from all our staff."

Renewed optimism

Mr Waldron's words seemed to mollify investors, whose grievances of late had resulted in the company's share price sliding below £19 from close to £24 during the last month.

On Friday, Tandem shares bounced back strongly, surging to £24.75b before slipping back to £23.75 in early afternoon trade.

Children bicycles helped fuel growth

Investors took heart from the performance of Tandem's MV Sports mail order unit, which sells children bicycles badged with Barbie, Bob the Builder and Thomas the Tank Engine characters.

The unit, which also distributes Kickmaster football training kit, saw both sales and profit margins improve and identified as a shining star within the group.

Its Ben Sayers golf products were also defined as a promising source of future profits.

'Unacceptable level'

In contrast, the Pot Black unit, the former pool and snooker firm which has diversified into outdoor play products, suffered "a difficult year", Mr Waldron said.

Both sales and profit margins were eroded by "increased competition from unbranded imports leading to price deflation".

"A trading loss was incurred in the year at an unacceptable level and this has continued into the current financial year," he said, stressing that the search is on for "the best way to profit from this well known brand".