Brompton’s profit margin has fallen dramatically, with the folding bike company making just £4,602 before tax in the year to April 2024, down from £10.7 million.
The bike manufacturer generated profits equivalent to the retail cost of two of its P Line folding bikes in the 12-month period, according to newly released company accounts. This marks a sharp fall after the business recorded pre-tax profits of £10.7 million in 2023, £7.3 million in 2022, and £9.6 million in 2021.
In a note accompanying the accounts, CEO Will Butler-Adams wrote that it had been a “challenging year” for Brompton, in which the company sold fewer bikes than expected.
“This decrease in profit margin is primarily due to the miss in budgeted sales by the Group, and the delay in being able to respond with a reduction in costs due the committed and fixed nature of a number of them,” he explained.
Brompton’s bike unit sales fell by almost 7,000 year on year, down from 91,875 in 2023 to 84,899. This decrease was “driven by the wider global economic uncertainty and challenges in the cycling industry,” according to the CEO.
The manufacturer’s turnover also dropped 5.3% in the period, shrinking from £129.4 million to £122.6 million.
Other factors that contributed to the fall in profits included an increase in staff head count (up to 844 people from 805), marketing costs, and additional spending on research and development.
"The industry is still in turmoil and will not get better this year," Butler-Adams told The Guardian. "It will not be as bad as 2024, but there is still excess stock."
Despite its profit decline, the company continues to have a wealth of assets. This was bolstered during the financial year by a cash injection from an “equity fundraise”, with the sale of shares generating £19 million. The company finished March 2024 with net assets of £65.1 million.
“This move is designed to strengthen our balance sheet,” wrote Butler-Adams of the share selling. “This proactive approach positions Brompton to navigate challenges and seize opportunities even amidst times of uncertainty.”
In January 2024, Brompton announced that it had become a certified B Corp, meaning it performs at high social and environmental standards.
Speaking to Cycling Weekly at the time, Butler-Adams said the company had “absolutely” been hit by a slump in trade following the pandemic boom.
“We thought we were going to grow. Instead, we’re going to end up pretty much flat,” the CEO said.
Still, he added: “Business is about being agile. It’s about responding to what’s happening on the horizon and being careful, caring for your suppliers and your staff.
“We’re still investing quite heavily, but you’ve got to spend less, you’ve got to cut some projects you thought you were going to do or put them on hold. You can’t do everything.”
Brompton declined to comment on its latest annual accounts.
