AMSTERDAM (May 18, 2006) — Amtel-Vredestein N.V. doubled its operating profit last year but reported a net loss of $81 million in fiscal 2005 due to $86 million worth of write-offs.
The company did not report sales revenue but said it sold 15.1 million tires during 2005, with particularly strong growth in branded passenger car tires.
“Our positive results demonstrate that the company's strategy of moving away from lower margin products and into higher-quality, higher-margin tires is gaining momentum,” said CEO Alexei Gurin. “Our integration of Vredestein has been particularly fruitful and contributed to our improved operating margin in spite of significant increases in raw materials costs.”
This is the first earnings report from the company since it listed its shares on the London Stock Exchange in November 2005. Full audited results will be released May 31.
The write-offs primarily were the result of the disposal of significant assets in 2005, including its Amtel-Sibir tire complex in Krasnoyarsk, Russia, and Amtel-Carbon, its carbon black factory in Volgograd, Russia.
The company also recorded write-downs of fixed assets and goodwill associated with the suspension of bicycle and truck tire production at its Voronezh, Russia, facility; incurred restructuring charges, primarily due to redundancy costs plus costs associated with share options that were issued and disclosed at the time of the company's IPO in November.
The company said it expects to record smaller but ongoing restructuring charges as it continues to reduce headcounts at its facilities over the next several years.