Amtel-Vredestein annual report gives detailed profile of company

Moscow - Amtel-Vredestein's annual report for 2005 gives a detailed picture of the company's capabilities and output over the last year.

The company is aiming to be Russia's biggest tyre retailer and has revealed that the Voronezh-II factory is modelled directly on the Vredestein plant in Enschede, Netherlands. The factory will have nine tyre building machines and 36 hydraulic curing presses. These are expected to produce 2.5 million car tyres per year in rim sizes from 13 to 18 inches.

A-V added that it has completed design and development work on a runflat tyre, which, "is ready to be launched into production when and if the company determines that the market for runflat tyres is commercially viable."

The company increased prices to the wholesale sector by 12 percent for the summer range and 6.5 percent for winter tyres. Amtel-Vredestein also has exclusive OE delivery contracts with arrangement with Kia Spectra (Izh Auto) and Lada Kalina (AvtoVAZ).

The company has a strategy of moving away from low-profit business. These segments include truck tyres, C-segment car tyres and unbranded tyre sales. The company lists A segment as 'premium', the B segment as Value tyres and appears to define C segment as "unbranded/low price tyres" or commodity products with minimal profit margin.

A-V reduced sales of unbranded Passenger Car Tyres by 48% in 2005, while C-segment sales as a percentage of overall sales has reduced from 25% in 2004 to 9% in 2005. C segment sales as a percentage of passenger car tyre sales decreased from 69% in 2004 to 18% in 2005 (from 14% to 12% on a pro forma? basis), said the company. A-V said that the reduction in C-segment occurred despite new OE contracts in the segment. "we entered into original equipment (OE) supply agreements with Hyundai Accent (TAGAZ) and new UAZ models (UAZ Patriot, UAZ Hunter) with low margin C-Segment tyres" the company said in its report.

A-V sold fewer passenger car tyres in 2005 compared with 2004, but saw sales revenue double over the same period. The company sold 10.6 million PCT units in 2005 (2004: 10.8 million), while revenue from PCT in 2005 reached $345 million, up from $174 million in 2004. Much of this difference can be attributed to the acquisition of Vredestein in the mix, but revenues still rose 30 percent on a pro-forma basis, while tyre ouput increased 29 percent, to 11.3 million units on a like-for-like basis.

The company spent $12 million on advertising and promotion in 2005, around 1.8 percent of sales.

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Download Annual report from Amtel-Vredestein website (100kb .PDF file)