Imports Take Their Toll on Bridgestone SA

Bridgestone Firestone Maxiprest fell deep into the read last year, the South African Business Day has reported. The group reported a headline loss of 44 million rand (almost £4 million) for the year to ended December, compared with 2 million rand (£177,000) profit for the previous year. According to the report, the company’s losses were caused by product shortages, competition from imports and the expense payments made to former directors.

At the same time, margins came under pressure from rival imports, the group said. The group margin reduced to 24.6 per cent from 26.9 per cent the year before. The company said the reduced margins together with charges of 30 million rand (£2.7 million) had led to the headline loss.

Charges included the payment to directors for “loss of office” and a 14.6 million rand (£1.3 million) impairment on African operations. The rand’s appreciation also cost the group 4.9 million rand (£434,000). Meanwhile, Mr Sinclair said that further improvements could be expected from the group’s empowerment joint venture, Roadgrip Afrityre, in which the tyre company held a 40 per cent share. The venture traded at a reduced loss of 5 million rand (roughly £400,000) last year, after it secured more contracts.

With such a tight budget, the 7.4 million rand (£656,000) the group paid out to its former directors worsened the company’s financial position substantially, Business day explained. Company secretary Gordon Sinclair said the payments were made as per the agreement with some of the directors who resigned from the company last year. Some of these resignations were reportedly because of differences between controlling shareholder Bridgestone Firestone SA and management.

Mr Sinclair explained that while the management situation had stabilized, the company struggled to supply the sub-Saharan Africa market last year as a result of the worldwide shortage of tyres. The shortage occurred mainly in the supply of new tyres, particularly truck and earth-moving equipment tyres, he added.

In January the group closed all of its Zimbabwean operations as well as its Chingola factory in Zambia. In SA the company rationalised operations by combining branches. The group says it has reduced overheads substantially and could be profitable this year.