Cost-cutting boosts profits at Telford manufacturer Aga's US owner
Major changes to Aga, which has shed dozens of jobs since its American takeover in 2015, have made the famous oven maker more profitable but cost it sales, new figures have revealed.
Owner Middleby Corp's results for the first half of the year show the division which includes the Telford-based manufacturer's revenues declined year-on-year in the three months to July 1.
Aga Group was blamed in part for the decline because of attempts to integrate the business into the wider group. Illinois-based Middleby has ditched unprofitable products and reduced the amount of discounting in an effort to simplify its residential kitchen equipment division, which includes Aga.
Sales at the residential kitchen equipment group fell by $22.8 million (£17.5 million) or 13 per cent to $153.2 million (£117.9 million) in the second quarter, but the company said the division was more profitable because of "the favourable impact of restructuring initiatives" at Aga.
Chairman and chief executive Selim Bassoul said: “At our Residential Kitchen Equipment Group, the second quarter sales decline reflects the impact of lower revenues at the Aga Group due to acquisition integration initiatives.
"In an effort to simplify those businesses and significantly reduce costs, we have eliminated unprofitable products and reduced price discounting for non-core business within that group."
Middleby took over Aga Rangemaster in September 2015 and in December of that year announced 70 job losses from across its sites in Ketley and Coalbrookdale.
That was followed by another 63 job losses last November, and the company is currently preparing for the closure of its historic foundry at Coalbrookdale in November, which will affect 35 workers – although it is not yet known how many of those jobs will be lost and how many will transfer to the assembly plant at Ketley.
The group as a whole saw sales both for the last three months and for the first half of the year largely flat.
For the whole period they are 1.16 per cent ahead at $1.1 billion (£854 million), after a 0.2 per cent fall in the last quarter to $579 million (£446 million).
Operating profit increased by 9.1 per cent in the second quarter to $122.1 million (£94 million) in the second quarter, however, despite the company spending $11.5 million (£8.85 million) on cost-cutting at Aga.
Mr Bassoul added: “Through our continued focus on product innovation, pricing discipline and operational excellence we realised record margins despite short-term revenue declines.
"We have ongoing initiatives to integrate recently acquired businesses and remain in the early stages of leveraging synergies in our newly developed residential platform.
"We remain confident in our commitment and progress toward our longer-term margin expansion goals for the company."
