Demand for Brompton’s folding bikes has outstripped its ability to supply a booming cycling market around the world after a surge in new riders during the Covid-19 lockdown.
The bike maker will embark on an investment drive to meet soaring demand, according to Will Butler-Adams, Brompton’s managing director and major shareholder.
He said the 500-strong, London-based company would recruit more than 100 people this year as it increased production and invested in electric versions of the foldable bike much loved by commuters.
“We have decided we are going for it,” he told the Financial Times, outlining plans to increase sales in key markets in the EU that he was confident would be unaffected by the UK leaving the European single market. “It's a once in a generation opportunity. We are recruiting like flipping mad.”
Turnover rose by more than a third in its 2020 financial year ending in March to £57m, according to accounts filed at Companies House on Tuesday, with pre-tax profits jumping by two-thirds to £6m.
The company made a gross margin on bikes of 49.7 per cent, bolstered by direct distribution and special edition sales.
Since the end of this financial period, the company has continued to see high demand for its bikes, according to Mr Butler-Adams.
“We’ve been in a period since lockdown [in April] where we cannot supply the demand.”
Brompton is the UK’s largest domestic bicycle manufacturer, selling about 59,000 bikes in the last financial year that are made in its factory in Greenford, London — an increase of about 10,000 bikes since 2019.
The company wants to boost exports to the EU after Brexit, although in 2020 exports fell as a percentage of sales to 69 per cent, from 73 per cent. “Germany, France and the US should be bigger than the UK,” he said, adding that China was already its second-largest market.
Brompton started selling its bikes directly to consumers during the lockdown — creating an ecommerce business in a matter of months that would normally have taken two years, said Mr Butler-Adams.
But it has had to pause selling direct to EU customers after the UK left the EU single market and customs union at the start of the year. Mr Butler-Adams hopes to restart this operation within a month, however, as the company worked through the new border requirements.
During the first lockdown, Brompton’s production was temporarily reduced to about 1,000 bikes every week amid a sharp fall in demand for its products.
However, demand then started to increase quickly and production had returned to pre-Covid levels by September, only slowed by Brompton’s own trouble getting supplies again after it delayed orders during the pandemic.
“It's taken us a while to take advantage as we did not have the bits,” he said, adding that this was helped by the use of a £1.5m stockpile of parts built up ahead of Brexit.
However, with this supply gone, the UK’s departure from the EU has had an impact on his business, with parts being held up in Felixstowe and Rotterdam and disruption to exports between Dover and Calais.
But he was confident that this would be shortlived. “Let’s get on and make [Brexit] work,” he said.
During the year, the group paid dividends of £858,474. It aims to distribute about a fifth of profits through dividends to its owners, which include Mr Butler-Adams, with the remainder reinvested in the business. Staff own about a fifth of the company.