Thompson Aero Seating hit by £28m loss with further pain predicted
A Co Armagh aeroplane seat manufacturer has reported a drastic slump in profits as it made a £27.7m loss in 2018.
Thompson Aero Seating in Portadown has fallen into the red following a £10.7m pre-tax profit in 2017.
In its annual report and financial statements, it blamed an inability to meet the demand created from an "aggressive uptake in business during 2017".
A strategic report said there had been "an ever-increasing level of product complexity without an adequate industrial plan to deliver on those commitments".
The report, filed with Companies House, also said that Thompson Aero Seating expects 2019 to be "another difficult trading year" but that the firm predicts a "level of stabilisation and return to profitability" in 2020.
However, the firm, which makes seats for clients including Aer Lingus, Delta Air Lines, China Eastern and Philippine Airlines, did report a 34% rise in turnover. Turnover rose from £105m in 2017 to £141m in 2018.
Staff at the firm also increased from 543 to 788, with an average annual salary of £38,000.
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The highest paid director was paid £274,000 in 2018, down 36% from £426,000 for the previous year.
Economist John Simpson said the results were "a surprise" following earlier profitable years.
"The scale of the fall in profits at the same time as the volume of business has been increasing is a disappointment," he said.
"The annual report also says that the results in this year, 2019, will record another loss.
"There is a concern that the company has accepted contracts that were unrealistically priced. The current directors acknowledge a serious management challenge in aiming to restore profitability in 2020.
"Thompson Aero Seating is now, through an intermediate company, wholly owned by a Chinese government organisation.
"It has been trading with a strong order book, although the company is now delivering on orders accepted some time ago.
"The critical test will be the number of orders won in 2019-20 and whether the contract prices allow a profitable outcome."
Chief executive Andres Budo, who replaced Gary Montgomery in January, said in August that the firm was on course to double its turnover to more than £220m and grow its workforce to between 1,600 and 1,700 by the end of the year.
Mr Budo, an ex-Airbus executive, took on the top role when Mr Montgomery moved to Thompson's Chinese parent company after nine years in charge.
The Aviation Industry Corporation of China (AVIC) bought Thompson Aero Seating in December 2016, for an undisclosed sum with the deal believed to be worth tens of millions.
Companies House filings also list Chinese government body the State-Owned Assets Supervision and Administration Commission (SASAC) as having significant control of the business.
SASAC supervises and manages assets of state-owned enterprises in China such as AVIC.