Indonesia
Indonesian automotive component company PT Astra Otoparts Tbk has signed a Memorandum of Understanding with Pirelli to build a motorcycle tyre factory in a yet to be announced location in Indonesia. This plant, Pirelli’s first in the country, will focus on production to meet both local demand and for export to Asean and other global markets.
To meet growing global demand for passenger car radials, Bridgestone Corporation has decided to erect a new plant in Vietnam. The company will invest 35.5 billion yen (£286.2 million) in the project, which is expected to enter production in the first half of 2014. When production reaches full capacity in the first half of 2016, the Vietnam plant will manufacture some 27,400 tyres per day and boast a workforce of around 1,900 employees.
Demand for tyres and tubes is set to grow by 12 per cent annually in Saudi Arabia according to a new report published by Research and Markets called "Automotive Tire Industry in Saudi Arabia". The largest market for tyres in the Middle East, Saudi Arabia still imports most of its demand, with the annual value of tyres needed to feed the market adding up to almost US$800 million. This equates to 13 million units every year and volumes are expected to keep on rising as consumer demand increases over the next few years.
Norbar Torque Tools has announced that Catherine Rohll has been appointed to the company’s board as commercial director, strengthening the family management team. She will hold the position jointly with her cousin Craig Brodey until he moves to Norbar’s Australian head office in Adelaide to work with the existing operation, supporting business growth for the company in the South East Asia region. He will take up his new appointment as commercial director for Australia in January 2012.
Moody's Investors Service has placed PT Gajah Tunggal Tbk's B3 corporate family and senior secured ratings on review for possible downgrade. According to a report published in Indonesia Today, this review action follows “the payment of a dividend to shareholders seemingly in contravention of the covenants of its restructured bonds launched in June 2009, and the resulting alleged claim of covenant breach by an anonymous bondholder.”
Buoyed by better economic data from the US, natural rubber prices in Malaysia and Thailand increased for the third straight day. According to Bloomberg, March delivery natural rubber pricing increased 1.4 per cent to US$4,020 per tonne on the Tokyo Commodity Exchange. Rubber pricing also improved from the second quarter’s 15 per cent falloff.
The scramble to purchase a controlling stake in Indonesia’s second largest tyre manufacturer Multistrada Arah Sarana PT continues, as Reuters reports that the company’s shareholders have rejected a bid from Hankook for a controlling stake. Yokohama and private equity investment firm TPG Capital are reported to be the other bidders, though a Hankook spokesperson told Reuters that “none of the bids satisfied” Multistrada’s shareholders.
Following earlier reports from multiple sources that Indonesian tyre manufacturer Mulistrada is for sale, further details of the potential purchase have emerged. We already heard that Hongkong and Shanghai Banking Corporation (HSBC) was said to have been named as advisors relating to the sale, but the latest update is that the floor price for the final bid is at least 600 rupiah per share, reflecting 15.07x price to earning ratio (PER) in 2011. Dealer blog Insider Stories reported its sources as saying: “I heard that the floor price is 600 per share. But, there is an opportunity to raise the bid up to 800 rupiah per share.”
To secure its own supply of natural rubber, Apollo Tyres has leased approximately 10,000 hectares of land in the Southeast Asian country of Laos. Company chairman and managing director Onkar S Kanwar announced at Apollo Tyres’ Annual General Meeting on August 11 that the tyre maker has “actively entered the area of rubber plantations to try and secure future supplies.” Kanwar later noted that the yield from this rubber plantation would be ready for tapping in within two to seven years and that within five years Apollo plans to meet 25 per cent of its total natural rubber requirements from leased plantations. Reaching this level of self-sufficiency is viewed as a form of insurance – Kanwar opined that a crisis situation currently exists in India in regards to increasing raw material prices and natural rubber shortages.
Hankook, Yokohama and buyout firm TPG Capital have all been linked to a possible share purchase of Indonesian tyre manufacturer PT Multistrada Arah Sarana. The firms are said to be bidding for a controlling stake worth “at least $200 million” in the Indonesian tyre maker, the Reuters news agency reports, citing three sources.
Multistrada is Indonesia's second largest tyre maker and is controlled by one of the country's biggest conglomerates, the Salim Group, along with investment banker Peter Tanuri. Together they are said to own over 44 per cent of the firm through direct and indirect stakes.
In June Hankook Tire held a groundbreaking ceremony for a new tyre plant in Indonesia. While the Korean manufacturer has already shared plans to service the North American and Middle East markets from this facility, executive vice-president Hyun Bum Cho has told Indonesian journalists that it intends to secure a 25 per cent share in the domestic market through output from the plant.
While Indonesia’s PT Gajah Tunggal Tbk is reported to have increased its sales 20.8 per cent year-on-year to Rp 5.8 trillion (£414.0 million) in the first half of 2011, selling costs increased 32 per cent to Rp 5.05 trillion (£289.1 million), leading to a 22.7 per cent drop in gross profit to Rp 768.79 billion (£54.9 million). Operating profit in the first half also declined, by 34 per cent year-on-year to Rp 441.4 billion (£31.5 million). The manufacturer of the GT Radial brand reported net profits of Rp 421.9 billion (£30.1 million) for the six-month period, up 1.4 per cent year-on-year.
On June 30 Prof. Dr. Djoko Said Damardjati ended his three-year tenure as Secretary General of the Association of Natural Rubber Producing Countries and handed the reigns to Dato’ Dr. Kamarul Baharain bin Basir. Following the end of his term, Damardjati has taken up the post of principal scientist in the Centre for Food Crops, part of Indonesia’s Ministry of Agriculture.
Six banks have reportedly agreed to support a Deutsche Bank-arranged US$225 million 3.5-year term loan for China’s GITI Tire. According to Thompson Reuters’ ifre.com website, unnamed banking sources shared the information with the publication. No details of what the loan is intended for have yet been released, but it looks likely to be a refinancing tool. GITI has not officially commented on the reports.
Automechanika Middle East 2011 concluded on 9 June with confirmation that it was the largest international automotive aftermarket trade fair in the wider Middle East region. According to data provided by the exhibitions organisers, 17,421 visitors from over 120 countries attended the show, with a 52 per cent of them described as international visitors. In addition there were 1,102 exhibitors from 52 countries.
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