TiWheels Earnings Drop 40 per cent

South African company Tiger Wheels Limited (TIW) reported a 40.4 per cent decline in earnings per share for the year ended June, online news sources have reported. The group reported a 6.7 per cent increase in revenue to 3.3 billion rand while operating income declined by 46.4 per cent. Profit for the year also went down from 157 million rand to just over 79 million.

Tiger Wheel said the lag effect of aluminium prices continued during 2006 as prices rose to an all time record during May 2006. Order book volatility, pricing pressure caused by overcapacity in the industry, and the tail end of start-up losses in the new US plants, all continued to impact negatively on the results.

The group opened four new retail stores during 2005, and has introduced new wheel and tyre products to the wholesale business. The new stores are expected to contribute to the group’s future earnings growth in the years ahead.

The long term benefits of recent investments in capacity growth and productivity improvements are expected to impact on the results during the second half of 2007.

In terms of the three-year plan, which has been prepared based on current knowledge and market conditions, the group’s order book is well matched to its available and planned global capacity.

“The most significant future contributor to growth in earnings should be the two US plants, with a return to historical levels from the two European plants,” the company said.