Company Report: AJ Power
AJ Power is based in Craigavon and has been operating there for over 10 years. The firm manufactures diesel-powered generating sets for sale in international markets where it has three subsidiary companies - two in South Africa and one in Sweden.
In the early months of 2019 the group has been completing a major expansion of facilities at its headquarters. This has been reflected in the large increase in capital spending which will enhance the production capacity later this year.
Although turnover has been maintained and increased by 3% in the latest year, operating and pre-tax profits, whilst still significant, fell sharply in 2018. The company reports that the gross profit margin fell from nearly 23% to just 20.6%.
When the new facilities are in operation the augmented facilities will allow the business to integrate vertically which will enhance the security of the supply arrangements.
The company expects to be able to bid for larger contracts that need more sophisticated production facilities.
The transition to the new facilities seems to have had knock-on implications across the business. Operating costs have risen significantly. The increased capital spending has in part been financed by an increase in access to borrowed funds through new loans of £2.9m. An increase of £3.4m in the level of stocks was also reported.
Dividends to shareholders which cost £187,000 in 2017 were reduced to £75,000 in 2018. The retention of post-tax profits in the business saw the value of shareholders' funds increase by 7% to £11.9m.
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Employment numbers remained steady at an average of 121 people.