Amsterdam - Amtel-Vredestein NV recorded a net loss for the year of $81 million, due to $86 million-worth of write-offs. However, the company said margins grew, while operating profit doubled in the year.
These write-offs were primarily the result of the disposal of significant assets in 2005 including its Amtel-Sibir tyre complex in Krasnoyarsk and Amtel-Carbon, its carbon black factory in Volgograd.
The company also recorded write-downs of fixed assets and goodwill associated with the suspension of bicycle and truck tyre production at the company's Voronezh facility; incurred restructuring charges, primarily due to redundancy costs; plus costs associated with share options that were issued and disclosed at the time of the company's IPO in November. The company expects to record smaller but ongoing restructuring charges as it continues to reduce headcounts at its facilities over the next several years.
This is the first earnings report from the company since it listed its shares on the London Stock Exchange in November 2005. Full audited results will be available by 31 May 2006.
The company said it sold 15.1 million tyres in 2005 and reported particularly strong growth in branded passenger car tyre sales. Our positive results demonstrate that the company's strategy of moving away from lower margin products and into higher quality, higher margin tyres is gaining momentum,â€ said CEO, Alexei Gurin. Our integration of Vredestein has been particularly fruitful and contributed to our improved operating margin in spite of significant increases in raw materials costs.â€
The company introduced its premium Vredestein brand to the Russian market in the second half of 2005. It became the largest tyre retailer in Russia in 2006 with 104 stores. Its Voronezh II factory is scheduled to come online in 2007 with an additional 2.5 million capacity, expandable to over 4 million tyres annually. Our business model is sound and our growth will continue to accelerate as we mature our brands, expand our retail distribution, increase our production capacities and reduce overheads,â€ said Gurin.
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Press release from AMtel-Vredestein