Supercart revenues climb 53% to £7.3 million, but margins implode

Supermarket trolley designer and manufacturer Supercart (LON:SC.) plunged 37% this morning after the AIM listed company reported that its margins had fallen by 6.5% to 11.5% in the 12 month period ended 31 December 2009.

In 2009, the group completed a company transforming acquisition of US based Rehrig, which helped boost revenues in the year by 53% to £7.354 million. However, less impressive, the company reported that administrative expenses shot up 34% to £2.8 million and margins plunged from 18% in 2008 to 11.5% in 2009 as manufacturing costs rose in North America.  Total units sold increased by 40% to 95,202.  Cash balances at year end fell by more than 50% to £0.5 million (2008: £1.025 million), while loss per share widened to 3.92 pence from a loss per share of 2.76 pence in 2008.

Mike Wolfe, Chief Executive of Supercart said that the company had been impacted by lower than anticipated sales from six new lines of shopping carts created in 2009. However, looking ahead to the rest of 2010, Wolfe stated that it had witnessed ‘significantly higher’ sales activity in the first part of new fiscal year, particularly with Toys R Us and Target.
“The Company has, for the first time in its history, a full range of products available in each of our major markets which, since the start of the year, enables us to now compete directly and effectively with our major competitors.  The progress we have made in the first five months of the year has given the Company strong momentum for the remainder of 2010,” Wolfe added.

Despite Supercart’s optimism for 2010, investors were nonetheless focused on the limited cash pile on the balance sheet and an omission from the company that it would require additional working capital sooner rather than later.