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Tough decisions ensure JCB remained Profitable during 2008

JCB remained profitable during 2008 despite the sharp deterioration in market conditions in the global construction equipment industry, the company announced today.

JCB recorded pre-tax pre-exceptional profits of £39 million last year on a turnover of £2 billion. With total sales of 57,000 machines and a global market share of
10.8 %, JCB remains the world’s third largest construction equipment brand. The company also retains its position as the world’s number one manufacturer of backhoe loaders, with more than a third of the market.

A bright spot in 2008 was JCB Agriculture, which achieved a sixth successive year of growth, with sales up by more than 14% on the back of an agricultural sector that held up far better than the global construction equipment market, which shrank by 15% during 2008.

JCB announced its annual results as the company also confirmed it was expanding its global excavator production capacity with the opening of a new assembly plant in Brazil where the production of JCB’s 400,000th backhoe loader was also marked yesterday at a special ceremony.

Commenting on JCB’s 2008 results, Chairman Sir Anthony Bamford said: "After several years of growth, 2008 was very challenging for the construction equipment industry. JCB responded quickly to the downturn by taking difficult decisions to ensure production remained aligned to demand. These actions ensured we remained profitable and the ongoing cost reduction programme at JCB means the company is set to emerge from the downturn stronger, leaner, fitter and more successful than before. This will mean JCB can continue to invest in its products and factories, which is vital to meet the demanding requirements of our customer base.

"World markets have continued to decline in 2009 but JCB’s sales have not fallen at the same rate which means we are continuing to gain market share in some key markets, including the UK and Ireland, Germany, Brazil and Russia and the CIS."

In 2007 JCB reported profits of £187 million on a turnover of £2.25 billion and sales of 72,000 machines.

The news of JCB’s expansion in Brazil comes in the year when full production of tracked and wheeled excavators began at the new £40 million JCB Heavy Products factory in Uttoxeter, Staffordshire, where a range of 25 different machines are manufactured. JCB also produces excavators in Pune, India, where a plant was opened in 2007 as part of a £25 million investment in Indian manufacturing.

The new excavator assembly plant in Brazil is adjacent to JCB’s existing backhoe loader plant in Sorocaba.

JCB CEO Matthew Taylor said: "Since JCB began manufacturing in Brazil nearly a decade ago, we have made significant strides in growing our market share in the country and in the Latin American region. The time is now right to build on that position and invest in an excavator assembly plant to better serve the South American market. The volume of excavators JCB sells in the region now justifies this investment and local assembly will put us in a much more competitive position and allow us to further increase both sales and market share."

JCB will begin assembling the 20-tonne JS200 models at the new 14,000m² site.

He was speaking as the machine made so famous by JCB the world over that it entered the English language today celebrated a major milestone. JCB’s late founder Joseph Cyril Bamford invented the backhoe loader in 1953 and by 1989 its renown had grown to such a level that the word JCB was included in the Oxford English dictionary as the definition of a construction machine with a hydraulically operated front shovel and excavator arm at the rear.

Yesterday the 400,000th JCB backhoe loader rolled off the company’s production line at its manufacturing facility in Brazil, where the company has been making the ubiquitous machine for almost a decade. JCB also has huge backhoe loader manufacturing facilities in Staffordshire, UK and Ballabgarh, India.

Matthew Taylor said: "Two in every five backhoe loaders sold around the world is made by JCB, a fabulous testament not only to the strong pedigree of this machine but also to the quality and innovation of the product over the past 56 years.

"JCB took 43 years to manufacture 200,000 backhoe loaders; we’ve taken just 13 years to produce the next 200,000. The versatility of this machine is unrivalled and there is a huge amount of growth to be achieved around the world with sales of this machine. For instance in Brazil, sales of JCB backhoe loaders have quadrupled in just three years which is quite some achievement in the current economic environment and a huge credit to our team. It’s appropriate that the 400,000th backhoe should come off the production line in Brazil as I expect South America to provide much of the future sales growth for this product and other JCB machines."

Joseph Cyril Bamford is credited with inventing the backhoe loader as we know it today because while backhoes and front end loader machines existed separately, no-one had thought to marry the two concepts together – until Mr JCB. The result was the red-and-blue painted JCB Mark I Major Loader, which could dig to a depth of 11 feet and of which 550 were made.

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