Trayal Sold to a Bulgarian Power Supplier

Although the Serbian media is already reporting that the takeover of Trayal is already set, negotiations on the details of the deal have yet to take place. However, the odds are good that Brikel will be able to takeover the 76.9 per cent stake of the tyre manufacturer that is currently owned by the state. The privatisation agency already tried to sell the tyre manufacturer at the beginning of this year but couldn’t find a potential bidder. During the new attempt to sell Trayal, two private equity firms have participated in the tender: Elcor Holding from Holland and Hemslade Trading from Cyprus (owned by Serbian businessman Miroslav Miskovic). Matador from Slovakia is said to have been interested in the company as was a Bulgarian bank but neither got as far as the bidding process.

Currently Trayal Corp. is active in three different and rather diverse main business fields. First there are rubber products including tyres of various kinds. Then there is security devices/technology as well as pyrotechnics. The company also does retailing, freight forwarding and operates hotels. But 80 per cent of Trayal’s turnover last year (£35.6 million; 2005) was generated with rubber products, in other words tyres.

The rubber products business field is divided again into three sub-segments: industrial tyres, two-wheeler tyres, and passenger car tyres. There are three production sites in Serbia, one for each sub-segment. Last year Trayal produced up to 2 million tyres. The PC tyres sub-segment benefited from a cooperation with Kleber in the 1970s. Since then Trayal tyres have also been sold on Western European markets. In the UK Group Tyre (UK) Ltd. imports and sells Trayal tyres.

During the privatisation process all business fields are likely to be sold to a new owner as one entity. Of course the investor will have the right to restructure Trayal Corp. after the take-over and maybe get rid of the unprofitable parts of the company. In 2001 Trayal was not far from bankruptcy and only state intervention prevented the company from finally closing all it’s production sites. Back then about 2,500 employees lost their jobs. Today, the company employs about 3,500 people.

77.6 per cent of Trayal’s turnover stems from producing and selling tyres. With an annual turnover of £35.6 million (2005), £27.6 million is generated with rubber products. 60 per cent of this comes from passenger car tyres (£16.6 million), another 31 per cent is generated by industrial tyres (£8.5 million) which includes truck tyres.

Between 2004 and 2005 Trayal Corp increased its annual turnover from £26.5 million to £35.6 million. Although this meant an increase of 31.5 per cent, the company’s profitability remained weak. The company published an annual operating loss of £1.7 million for 2003, a year later Trayal halved this to £812,000. However, last year losses grew to £2.4 million. Although the operating business has been weak in recent years, Trayal has always managed to keep in the black. In 2003 Trayal published net profits of £632,000. One year later net profit increased by 43.3 per cent to £907,000. But last year net profits dropped again by 68.2 per cent down to £288,000.

The dominant position of passenger car tyres in the company is also reflected in the position Trayal has on its domestic passenger car tyre market. Trayal holds a market share of 23 per cent in Serbia and thus is clearly number two behind Tigar, state sources write. At the same time a major part of Trayal’s passenger car tyre production is sold on export markets like the UK, Germany or France. 58 per cent of the group’s turnover is generated on export markets, and 83 per cent of turnover generated with passenger car tyres stem from export markets.

During the last five years Trayal has had an average production of 360,000 industrial and commercial tyres although the annual production figures are decreasing. In 2000 for example Trayal had an annual output of 780,000 industrial and commercial tyres including agricultural proucts. The production of two-wheeler tyres is also decreasing. The average production during the past five years has been 1.5 million tubes plus another 700,000 two-wheeler tyres.

Trayal’s two most important production sites are located in the towns of Dedina (passenger car tyres) and Parunovac (industrial and commercial tyres) – both are in the Serbian county of Krusevac about 200 kilometres south of Serbia’s capital Belgrade. Trayal’s headquarter is located in the main city of the Krusevac county (also Krusevac). Not too far away from there the two-wheeler factory is located in t