Goodway to Acquire Big Wheel

Rubber compound manufacturer and tyre retreader Goodway Integrated Industries Bhd expects revenue to grow by 40 per cent, or about 10 million euros, in two years, upon acquiring a 100 per cent equity interest in Sabah-based retreading company, Big Wheel Holdings Sdn Bhd for 5.3 million euros, according to Business Times (Malaysia). With Big Wheel’s acquisition, Goodway will start producing between 4,200 and 4,500 pieces of solid tyres next year. Solid tyre manufacturing is expected to contribute about 5 per cent to the group’s total revenue. Currently, about 90 per cent of the group’s revenue is from its core business of rubber compound manufacturing, while the rest is from retreading services. Goodway produces 2,500 tones of rubber compound per month from its plant in Nilai, Negri Sembilan.

For the financial year ended December 31 2004, Goodway achieved a net profit of 1.66 million euros and revenue of 24.5 million euros, out of which 70 per cent was from the export market and 30 per cent from the local market.

Chief Executive Officer Tan Boon Wee said the acquisition of Big Wheel is part of the group’s long-term growth strategy to move into downstream businesses while expanding into the rubber and tyre retreading industry. However, he said, the group will not shift its focus from its main activity. “Big Wheel currently only produces less than 500 pieces of solid tyres from its actual production capacity of 7,200 pieces of tyres per annum. There are a lot of opportunities for Goodway to explore here.” He added Big Wheel’s previous management had also acquired a number of equipment used for rubber compound, and Goodway is planning to build another compound tyre factory outside of Malaysia by next year. “There is a surplus of equipment for retreading as well, and we plan to build a retreading plant in Sarawak next year,” Tan said.