CHINESE-owned aircraft seat manufacturer Thompson Aero Seating has announced a massive pre-tax loss of £27.7 million for 2018.
New accounts published by the Portadown-based company reveal that it experienced a 34 per cent surge in turnover to £141m last year.
But the speed of the growth appears to have caused significant problems within the operation.
The Irish company, which makes business-class seats for some of the world’s biggest airlines, was acquired by state-owned Aviation Industry Corporation of China three years ago.
In a strategic report analysing its 2018 financial performance, the company’s directors described an aggressive uptake in business during 2017.
The report suggests the company was not adequately prepared for the volume of orders, prompting Thompson Aero to close its order book for the majority of last year.
It said “an ever-increasing level of product complexity (both in development and certification) without an adequate industrial plan to deliver on those commitments”, had “diluted the profitability of the company’s portfolio as a whole due to the company’s pricing strategy”.
It states that most of the order commitments are scheduled to be delivered in 2018 and 2019 with a remaining portion scheduled for 2020.
“These performance problems, which started in 2017, resulted in the company carrying a high level of contractual risk into 2018 and 2019, and have had a significant impact on the profitability of the company,” added the directors.
“We expect 2019 to be another difficult trading year as we develop ramp-up and transformation plans, backed by strong sales and operations planning process to ensure we operate within the boundaries of our development and industrial system, before achieving a level of stabilisation and return to profitability in 2020.”
The company report shows that Thompson Aero’s decision to close its order book for most of 2018 reduced the book value from £535m to £407m.
Operating cash outflow rocketed from £6m to £50m – driven by the loss and increases in working capital.
A breakdown of Thompson Aero’s revenue reveal it experienced its greatest growth on the back of new contracts from the Asia and Pacific region, with sales rising 84 per cent to £71.7m
But the growth in sales was hugely offset by rocketing operational costs, which rose by 75 per cent from £94.3m to £165.8.
Looking ahead, Thompson Aero said its future strategy would be geared toward increasing its market share for wide body commercial aircraft, with a focus on the Middle East and Asia.
According to the report, the firm’s workforce grew by 245 people last year, with staff averaging at 788 over the year.
The company’s chief executive Andres Budo has spoken of the plans to open a new 350,000 sq ft production facility in the north by 2021.
In July, Thompson Aero launched a planning bid for a new £40m manufacturing, assembly, research and testing facility on a 100-acre site in Craigavon.
The company is also understood to be planning for a business park on the same site, involving up to 20 industrial units.
