Auto parts maker ElringKlinger has become the latest Northeastern company to expose a “catastrophic downfall” in the auto industry during the pandemic.
The Redcar company, which manufactures sealing and shielding modules for brands such as Ford, Jaguar Land Rover, BMW and Honda, released accounts for 2020 showing sales down 26.2% to 22.9 million sterling, with product sales down 34% from 2019 figures.
Operating profit in 2019 of £ 1.24million also fell, for a loss of £ 4.17million, while the total loss for the year was £ 3.536million and the workforce of the year went from 309 to 230.
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Bosses said the drop was mainly due to lower income following the pandemic, but also pointed to an Impairment of Assets (IAS) valuation write-down that suffered an extraordinary £ 3.62million write-off. sterling.
During the year, the company said it took advantage of the government’s coronavirus job retention program, saying it had demanded a total of £ 1.261million “to protect jobs during the pandemic, because sales and productivity in the automotive sector suffered a catastrophic drop in the second quarter of the year ”.
Despite declining sales and losing profits, the company said it continued to invest in modernizing its facilities and machinery “albeit at a much reduced level compared to in previous years ”.
He said inventory levels were down 27.3% from 2019, reflecting lower revenue.
In the accounts, the directors have indicated that they are looking to diversify.
The report states: “The automotive industry is going through a very uncertain period, with particular risks for this company due to progress in electrification across the industry and reduced sales of diesel cars.
“On top of that, the company identified a risk related to customer dependency. In order to mitigate this risk, the company continues to work on developing revenue streams from alternative markets and customers. Four major clients represent 86% of the company’s current shares.
The company says it is always on the lookout for new product opportunities for other areas of the market, but says “these remain elusive.”
ElringKlinger’s accounts come a week after supplier to Nissan Unipres and Nifco on Teesside, another auto parts maker, also released accounts highlighting the impact of Covid and other issues on the global auto industry .
Unipres saw revenue drop 44% to £ 116.6million last year, resulting in an operating loss of £ 13.4million, while Nifco reported revenue from £ 47.5million in 2020, up from £ 65.9million a year earlier.
Figures showed the number of cars built in the UK in August fell 27% from a year ago. The Society of Motor Manufacturers and Traders said the figures were “extremely worrying” and said “automakers and their suppliers are struggling to keep production lines running with constraints expected to continue through 2022 and maybe beyond “.
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