Stamford Tyres announced that its net profits for the year ended 30 April 2011 jumped 41.4% to SGD13.3 million off the back of “better sales mix of high performance tyres and earthmover tyres.” According to the company, this combination of high value items “offset rising tyre costs,” while the company’s business in the South Africa, North Asia and South East Asian markets are said to have put in strong sales performances.
Revenue increased 10% year-on-year to SGD341.4 million as a result of the better sales mix and increased sales contribution from key markets. As tyre wholesale prices continue to rise, the group successfully adjusted product mix and pricing policy. This reportedly resulted in a 19.6% growth in gross profit to SGD79.5 million and translated into a profit margin of 23.3% in 2011 compared to 21.4% last year. As a result, the board of directors has recommended a dividend of 1.5 Singapore cents to reward shareholders.
South Africa and North Asia drive growth
According to an official released by Stamford Tyres detailing is latest financial results, the group’s star performer in 2011 was South Africa where sales outpaced the group’s overall revenue growth. This region saw its turnover grow 24.9% year-on-year to SGD36.2 million from SGD29.0 million. Sales contribution from South Africa as a percentage of group turnover now amounts to 10.6% versus 9.4% a year ago.
One explanation for this rapid growth is the fact that the South African government has earmarked the automotive industry as a key growth sector with the aim of increasing annual vehicle production to 1.2 million units by 2020. Meanwhile, the National Association of Automobile Manufacturers of South Africa projected a 15% growth in overall domestic car sales.
North Asia sales also grew, up 18% to SGD33.9 million primarily on the ongoing expansion of China’s automotive market. The market for vehicles in China is currently the world’s largest since overtaking the United States in 2010, when the Chinese bought 18.06 million vehicles, up 32.4% over 2009.
Coupled with the better economic outlook, generally favourable market conditions are likely to continue – said Stamford tyres in its statement – to the benefit the group’s sales in both South Africa and North Asia.
The mainstay Southeast Asian market continues to deliver steady growth, increasing 8.2% to SGD262 million. With increasing vehicle populations in Singapore and Malaysia, Stamford Tyres representatives say the firm will continue to build on its leading position in the tyre distribution business in these countries.
“Our entry into South Africa proves to be a strategic move which enhances our top and bottom line. We would continue to aggressively grow the South African market by securing higher allocations of the well received Falken brand from our strategic shareholder Sumitomo Rubber Industries to meet growing local demands. At the same time, we are also working closely with Sumitomo to further expand our other markets. Building on the strong momentum generated, we are cautiously optimistic that our 2012 turnover and profit will exceed the levels achieved in 2011.” Wee Kok Wah, president & CEO of Stamford Tyres.
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