Linde Material Handling (UK)'s pre-tax losses rose 33% to GBP3.1 million (USD6.3 million) in 2006 compared with 2005, despite a 26.9% sales rise to GBP320 million (USD656 million). After tax, the loss was GBP5.3 million (USD10.8 million) while in 2005, it recorded a loss of GBP600,000 (USD1.23 million).

There is no dividend for the year.

The company's directors cite "significant increases in the cost of materials and supplies" and also highly competitive market conditions impacting the year's results.

German-owned until last year, Linde MH (UK) is Britain's biggest forklift manufacturer, with its main production plant at Basingstoke, acquired in 1989 when Linde took over the indigenous Lansing Bagnall.

Last year, however, the Linde group sold its worldwide forklift operations to a private equity group headed by KKR and Goldman Sachs Capital Partners for EUR4 billion (USD8.2 billion) and renamed the group Kion. Its strategy, like most private equity groups, is to sell the group through an IPO several years down the line after improving its profits. Kion's owners, however, may find that extremely difficult in an industry used to poor returns. The reason is competitive pressures, despite all the consolidation that has gone on in recent years.

Since 2001, the company has racked up accumulated losses of GDP22.5 million (USD46.1 million) in the UK, despite having sales per employee more than twice the industry average. One clue to the company's dismal performance could be its generous average employee salary bill of GBP 38,000 (USD78,000), well above the industry average. But a source within the industry alleges that Linde hurried the formation of its contract management department, which subsequently ran out of control and racked up multi-million pound losses, leading to significant staff departures.

It also seems clear that the company has been chasing sales growth at the expense of margins, despite raising truck prices last year.

Following industry speculation earlier this year about management reassessments, Linde confirmed to Forkliftaction.com News that "the UK management is continuously reviewing its business plans in order to improve the performance, efficiency and customer satisfaction."

Given the dismal profits record, some shake-up seems long overdue. The 2006 accounts show negative working capital of GBP76.4 million (USD56.7 million) and net assets of only GBP43,000 (USD88,000), having fallen from GBP10.9 million (USD22.3 million) in 2005. When pension liabilities of GBP6.1 million (USD12.5 million) are deducted, there is a shareholders' deficit of GBP6.06 million (USD12.4 million).