Taxi maker sticks to black

INVESTMENT COLUMN

In boom times no one thinks twice about hopping in a taxi, but when recession hits it is one of the first business costs to be squeezed. No surprise then that Manganese Bronze, which makes four-fifths of the black taxis sold in the UK, has recovered well since 1992 when collapsing sales led to losses of pounds 2.45m.

The good news continued yesterday when MB reported more than doubled pre-tax profits of pounds 4.2m in the year to July, up from pounds 2.04m. Production of black cabs is running at 52 a week, up from 44 last year and well over 50 per cent higher than at the bottom of the recession.

Although the outlook is clouded a little by political uncertainty, there is no reason to doubt that steady growth should continue. But MB's future sales are underpinned anyway by the impending deadline for all taxis to be made accessible by the disabled. The company launched its own wheelchair- friendly Fairway eight years ago.

Already second-hand models dating from the late 1980s are worth pounds 2,000 more than non-accessible vehicles, reflecting the approach of the cut- off point early next century. The lion's share of the replacements are almost certain to come from MB.

Meanwhile, profits are growing in the rest of the business. Taxis remain the backbone of the group, raising their contribution 28 per cent to pounds 4.12m last year, but the automotive components operation saw its profits more than triple to pounds 829,000. Further elimination of loss-makers should see further recovery.

The group remains heavily exposed to the yen, the currency in which it buys the engines for its cabs, but recently the trend has been running in MB's favour. Profits of pounds 5.2m this year would put the shares, up 5p at 192p yesterday, on a prospective multiple of nine. Reasonable value, although the market is thin, with 44 per cent of the equity in family hands.

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