South African automobile parts group Tiger Wheels on Wednesday reported a 9,4% decrease in headline earnings per share to 214,1 cents for the year ended June 30 2005, from 236,3 cents a year ago.
The group is to distribute to shareholders a portion of the share premium account in lieu of a dividend. The distribution will amount to 73 cents per ordinary share from cash dividend of 71 cents per ordinary share last year, returning the payout to the 40% of attributable earnings traditionally paid to shareholders.
The group’s revenue decreased by 2,5% to R3,102-billion from R3,182-billion, while diluted attributable earnings per share declined to 178,5 cents, from 229,4 cents previously.
Profit after tax slipped to R146-million from R174-million a year ago.
The group attributed a decline in its earnings to the reduced contribution from its 74% held international OEM alloy wheel manufacturing business — the German-headquartered ATS group.
“The extent of this decline was softened by the performance of the domestic tyre and wheel trading businesses. Throughout the group, continued focus on tight asset management, cost control and productivity improvements once again resulted in an improvement in cash generation,” it said.
The group added that weak European automotive markets, along with the one-off effects of tax charges relating to prior periods, the bankruptcy of MG-Rover, higher-than-budgeted start-up losses in the new Alabama (United States) plant, and exchange-rate-related losses of R6,2-million all combined to negate the strong performance of the domestic trading businesses — to the extent that their results could not offset the reduced earnings of the ATS group totally.
Looking ahead, the group said that in line with the ATS objective to place itself in the bottom quartile of global costs of production, and in response to price pressures from customers, the group has accelerated the implementation of its new, in-house-developed process-improvement philosophy, which will be further developed and rolled out throughout the group as a running change over the next few years.
According to the company, the costs of this initiative, together with the tough pricing and order-book conditions in the automotive industry, should result in only static to modest growth in earnings in the short term.
However, the group pointed out that this programme, together with a vigorous cost and efficiency drive, is envisaged to bring significant benefits to the group globally in the years ahead.
“More specifically, for the year ahead, all plants are budgeting to maintain their current levels of output and profitability — with exception of the Alabama plant, which is forecasting increased production and modest profitability. The new Kentucky plant is budgeting to break even during its first year in our group.”
The company said small growth in earnings per share is expected in the year ahead. — I-Net Bridge