Amtel Confirms Krasnoyarsk Plant Sale

Amtel-Vredestein NV has confirmed that it has sold its Krasnoyarsk tyre complex to a Russian company, Vostokshinainvest. The company previously disclosed its intent to dispose of the facility in an announcement on 22 December 2005.

The Krasnoyarsk plant is a Soviet-era facility that primarily produces truck, agricultural and “C” segment tyres which do not fit the company’s current strategy of focusing on the production and marketing of high-margin A and B-segment tyres used on premium and mid-range passenger vehicles.

According to AV management, the Krasnoyarsk tyre facility is loss-making and the investment required to modernise it would have been prohibitive. Current demand for Amtel-Vredestein’s truck, agricultural and other specialized tires can be met through outsourced production.

While the disposal will result in a substantial non-cash adjustment for 2005, it is not expected to have any negative impact on Amtel-Vredestein’s sales in 2006 and is estimated to improve operating profit margins.