MELBOURNE, Australia (July 1, 2005) — Ansell Ltd. is writing down the value of its share in South Pacific Tyres Ltd. by more than half, citing lower-than-expected results in the past half year and a less-than-rosy trading outlook.
Ansell, which is Goodyear's joint venture partner in South Pacific Tyres, disclosed the write-down in its fiscal 2005 outlook, in which the company said it would meet its projected earnings goal of $115 million.
Ansell said its board of directors, after reviewing South Pacific's performance and outlook, decided to write down the value of Ansell's 50-percent holding by nearly 60 percent to about $45 million. Goodyear did not comment on Ansell's action.
Ansell blamed South Pacific's poor second half performance on a continuing increase in low price imported tires and significant increases in raw material costs.
The Australian company noted that starting Aug. 13 it will be able for up to one year to exercise an option to compel Goodyear to buy its share of the venture, at a price based on an agreed-upon formula.
Ansell also said it expects to recoup a loan it made to South Pacific of about $50 million when it exits the partnership.