Amtel-Vredestein 3Q Sales up 14%, 9-month Net Loss Doubles
Despite reporting net sales of $198 million in the third quarter of 2006 and $548 million (up 19 per cent) in the first nine months, Amtel-Vredestein’s net loss doubled to $22 million between January and September. For the full year, the company projects net sales in excess of $800 million and EBITDA of approximately $100 million in 2006, according to the company. “A net loss of $10-$12 million is expected for the year — primarily as a result of increased investment costs and interest expenses as the company continues its Russian production, distribution and retail expansion programme,” official documents stated.
In addition to on-going expansion at its Voronezh facility, Amtel-Vredestein reports that it increased the output of Vredestein tyres at its Kirov facility and continued development of its retail business, the company disclosed several acquisitions including the purchase of the Moscow Tyre Plant from the City of Moscow. Amtel-Vredestein also announced the acquisition of autoparts distributor Pigma and tyre distributor Megashina — which it is in the process of integrating with its AV-TO subsidiary.
Tyre production up 9 per cent
Amtel-Vredestein sold 3.2 million passenger car tyres during the third quarter of 2006, up 9 per cent over the same period in the previous year; and up 25 per cent to more than 9 million passenger car tyres for the first 9 months versus 7.2 million during the same period in 2005. The company’s AV-TO retail unit contributed $12 million to sales (on a stand alone basis) during the period (these results exclude those of Pigma and Megashina, which are expected to be merged with AV-TO in Q4)
The company plans to produce 12.3 million car tyres in 2006 and 14.5 million in 2007 — not including tyres to be produced at Russia’s Voronezh II plant which will begin production by the fourth quarter of 2007.
“It has been an exciting period for Amtel-Vredestein,” said CEO Alexei Gurin. “The Moscow Tyre Plant is an important addition to our manufacturing group and we are proud to have integrated it into our operations so swiftly. And, fortified by the addition of Pigma and Megashina, our AV-TO subsidiary is now poised for sustainable growth and an independent distribution and retail unit. Most important, we have now substantially completed our investment programme in Russia and can narrow our focus to building our brands and optimising the efficiency of our operations through consolidation and further cost-cutting.”