A major manufacturing upgrade programme has put Shine Food Machinery on course to exceed the turnover it recorded in 2017 with a quarter of the year still left to go – and gone some way to softening the blow of last year’s top line being dented by the severe delay of two contracts worth £2.5m.
The Newport-based kitchen design and installation house invested more than £250,000 into its fabrication plant, including a more intelligent control system for its laser, new automated folding equipment with optical calibration, a materials handling tower with hydraulic loading system and a total reconfiguration of the shop floor to enhance flow patterns and efficiency.
Managing director Julian Shine told Catering Insight that the upgrade project has delivered the improvements it was hoping for and this is borne out in the work it has completed this year.
“It has significantly increased our internal capacity and quality of finishing. We have just exited the busiest period in our history and the developments have enabled our fabrication to keep pace. Without the reduction in programming and tool changes, the removal of manual handling, and the much improved flow patterns, we would not have coped,” he explained.
Shine filed its latest annual accounts with Companies House this week and its income statement showed that turnover for the 12 months to 31 December 2017 reached £8.1m, down 12% from £9m the year before.
The company would have recorded turnover growth had it not been for some major contracts being delayed at short notice and dropping out of the reporting period.
“It was particularly disappointing as two jobs totalling around £2.5m were delayed close to a year,” described Mr Shine. “Managing the peaks and troughs of this type of work is what we do, but not usually to this extent. Unfortunately, it feels like the construction industry is operating beyond capacity at the moment, and you wonder what effect Brexit will have on future capacity.”
By the end of August we had matched the 2017 turnover with a tremendous amount of work still to be undertaken in the last four months”
Shine’s operating profit slipped from £200,000 in 2016 to £29,000 last year, according to the report.
Asked if the decrease was largely down to investments that the business has made in its factory and back-office – and whether it was likely to climb back up again in 2018 – Mr Shine said: “The gross margin has increased year-on-year and we were confident in self-funding a lot of the investment as we don’t perceive that there has been move towards more challenging conditions in the market. As for the net margin, yes it’s back.”
The company noted that BIM development has resulted in it becoming one of the highest-rated subcontractors for its supply chain, leading to it being named among the top 28 performing contractors out of 700 suppliers for one of the major fit-out contractors that it serves in the UK. It has also attained top-tier status for many others.
Shine has also spent the past year developing a bespoke ERP system that it is in the process of rolling out to achieve greater automation within the business.
The company believes the enhanced agility it has gained from its manufacturing and software investments will enable it to take advantage of any disruption to the catering equipment market created by Brexit.
Mr Shine confirmed the company now expects 2018 to represent its strongest performance to date and already has a strong order book for 2019.
“By the end of August we had matched the 2017 turnover with a tremendous amount of work still to be undertaken in the last four months. The alignment of our systems to harmonise with the ERP system has paid dividends, but the full benefit is still to be gained as we have only this week gone live after deciding to expand the system’s scope,” he said.