Brompton's profit is down despite a record turnover, the British folding bike company's accounts, published this week, show with inflation and supply chain risks hitting its business.
The bike manufacturer's accounts, published on Companies House, show that turner increased 40% to £106.9m ($128.7m) in the year up to 31 March 2022, up from £76.1m ($91.6m)
However, pre-tax profit fell 28% to £7.1m ($8.5m) from £9.7m ($11.7m).
This is down to a several factors, including a massive increase in funding for research and development, higher staffing costs, and rising costs associated with supply chain delays and manufacturing, as well as inflation.
Two of the biggest increased costs for the company were in staffing and research and development. The Brompton group has more employees than ever, according to its accounts, with 708.
Meanwhile, R&D spending quadrupled, rising from £370,574 ($446,218) in 2021 to £1,504,509 ($1,811,619) in 2022.
In addition the company sourced titanium out of both Ukraine and Russia before the war in Ukraine began last year, which has proved a struggle, and at the same time attempting to reduce its dependence on China and Taiwan for parts, amid fears of a growing military threat to the island from Beijing.
The company's chief executive, Will Butler-Adams, told the Financial Times in December that the current situation was "extraordinary".
“That restriction in supply out of Russia and Ukraine means that more people are going to China, the price of titanium is going up. So yes, that is a risk,” he said.
“You combine the raw material cost and the labour cost, I’ve never seen that in my career. It is extraordinary,” he said, and said that the company would give staff a “cost-of-living rise” in March that will be higher than last year’s 5%.
“We are prepared to take it on the chin for another 18 months and if nothing has stabilised we will then have to put price rises in to try and recover some of that profitability," he added.
However, the 2022 turnover is well over double the amount the company made in the last financial year before the Covid pandemic when it turned over £42.4m ($51.1).
The demand for folding bicycles appears to have exploded since then with the accounts showing the company sold 93,460 bikes in the year to 31 March 2022, its record year for bike sales.
It is growing outside of the UK and Europe at a fast rate, with a turnover outside Europe up 53% to £44,501,450 ($53,590,792), compared to £29,046,314 ($34,978,972) the previous year.
