By Scott Wright

SCOT JCB, the heavy equipment supplier to the construction and agriculture sectors, has reported a major hike in profits and turnover as activity recovered following a sharp downturn during the first year of the pandemic.

But the company, which has seen employee numbers return to pre-pandemic levels, expressed caution over the economic outlook, citing the impact of continuing supply-chain constraints, inflationary pressures and rising interest rates.

New accounts show Glasgow-based Scot JCB, which has 17 depots across Scotland and the north of England, reported a 46 per cent in rise in turnover to £176.6 million in the year ended December 31, despite the ongoing shortage of semi-conductors limiting supplier delivery, as key sectors reopened after lockdown.

The recovery in turnover, to near pre-pandemic levels, and action to control controls helped lift pre-tax profits by 4.1% to £7.3m.

Robin Bryant, joint managing director of Scot JCB, told The Herald: “Things did come back well last year. We managed to keep control of the costs and get a good number. We managed to make a decent profit at the end of the year, so we are pleased with that.

“But the challenges are still there as far as supplier delivery [is concerned] – it could have been even better if we could have got all the product we wanted. But I think that would be the same across most industries.”

Scot JCB, which supplies machinery such as forklifts, excavators and tractors, saw continuing strong demand from both contractors in the housebuilding sector and from farmers, supplying the latter with equipment to help with operational efficiency and improvements in fuel consumption and exhaust emissions.

However, it warned that current levels of demand from housebuilding may be curbed by rising interest rates, which increased to 2.25% last month and are now forecast to reach 6% next year. Mr Bryant said: “From our perspective, with housebuilding being behind so much of our growth, we really want interest rates to stabilise and come back down to more sensible levels so it is not putting off buyers and first-time buyers.”

Higher interest rates will increase Scot JCB’s stocking costs, as well as costs for customers such as farmers who purchase equipment on higher purchase agreements.

While activity levels are currently busy, Scot JCB also flagged challenges from the continuing shortage of semiconductors and other components, and the general economic outlook, amid fears the UK is poised to fall into recession later this year.

Asked if there was any prospect of the semiconductor crisis easing, Mr Bryant said: “I think it is still a big challenge for the manufacturers. In some cases, they are having to re-engineer machines to use less chips and things like that to try and overcome the problems. It is maybe not as bad as it was at the peak, but it is still a challenge for them.”

Overall staff numbers at Scot JCB have increased to around 310, broadly in line with 2020 levels, having dipped following some redundancies in response to the Covid-sparked downturn in activity.

The company emphasised the importance of its apprenticeship programme amid a continuing skills shortage, with the company adding 15 recruits to its engineering team this year. That helped it maintain a ratio of approximately one apprentice to three skilled engineers.

The period covered by the latest accounts saw the company unite its agriculture business under a single brand, Scot Agri, following the acquisitions in recent years of AM Phillip and Kelso and Lothian Harvesters. “That side of the business has really started to grow now we have got them under the one banner,” Mr Bryant said.

Meanwhile, Mr Bryant said the recent move by the UK Government to cap energy bills for businesses for six months was welcome, but said the company was looking at longer-term solutions for its energy needs. The company is investing in solar panels at its head office, and equipment such as heat pumps for its depots.

“We will be investing in our depots and our infrastructure to try and bring down those energy costs and make them a bit more green,” Mr Bryant said.

Several Scot JCB products are now fully-electric, added Mr Bryant, who said JCB is working on hydrogen solutions.