Chinese have Tiger Wheels roaring to go
March 5, 2004
By Gugulakhe Masango
Johannesburg - Tiger Wheels, the automotive parts group, would aggressively move into the lucrative Chinese market through a joint venture within the next two months.
"We have been requested by our customers, such as BMW, Volkswagen and Audi, to produce wheels in China with the same specifications as in other countries," Eddie Keizan, the chief executive, said yesterday.
However, the market was foreign to the group and it was in talks with Chinese companies to establish a joint venture.
"We anticipate to have finality on the talks within the next two months," Keizan said.
At the release of the group's half-year results to December, which showed the group was sitting on a cash balance of R182 million, Keizan said initial investments in the venture would be about €5 million (R41.7 million).
"We will have a foot in the door because our customers are already operating in the Chinese market," he said.
The Chinese market is regarded as the fastest-growing globally and it is estimated that by 2010 it will be the third-largest motor manufacturing country.
Keizan said that despite investing in China, the group would use its cash to reduce its debt, grow the business and hopefully distribute cash to shareholders.
Headline earnings a share rose by 1 percent to 79.8c and operating profit grew 10 percent to R86.8 million.
Group revenue increased by 9 percent to R1.52 billion.
"We are not satisfied with this growth as it was affected by the exchange rate, but in dollar terms our sales have climbed," Keizan said.
The group's local operation was underperforming, with operating profit reduced to R3 million from R26 million in the previous period, because of exchange rate movements.
"We hope to achieve more or less the same earnings as in the previous period," he said.
Keizan said the group was negotiating the retrenchment of 110 people, or 13 percent of its personnel, in South Africa.
Tiger Wheels stock closed unchanged at R16.60 yesterday.
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