Sales – and Losses – Increase for Amtel-Vredestein

Amtel-Vredestein has recorded an increase in net losses during the first half, an occurrence attributed to losses at its AV-TO operation and growing debt service expenses. Net loss for the period was US$33.5 million, up from $22 million last year, and to this negative figure the AV-TO unit contributed $17 million. EBITDA dropped 8 per cent to $31 million, driven by AV-TO

On a brighter note, the tyremaker reported net sales increasing 26 per cent in the first half, with the company delivering “strong operational results in its core passenger car tyre business.” Net revenue from passenger car tyres grew 24.5 per cent to $258.2 million from $207.5 in the first half of 2006.

A company statement reported Amtel-Vredestein is continuing to project sales of approximately $1 billion for 2007 and plans to be operationally profitable during the second half, subject to any potential asset impairments charges and provisions required by IFRS as a result of acquisitions and disposals made in 2006. However, the company expects to continue showing losses on a consolidated basis due to negative contributions by its AV-TO business and high interest expenses.

Deutsche Bank has commented that, despite the delay in the launch of the company’s state of the art Voronezh II tyre factory to the second quarter 2008 and AV-TO’s performance, it believes that the company’s new management will be able to make Amtel-Vredestein an ‘interesting turnaround story.’