Bridgestone NZ makes biggest profit in a decade in 2012, pays first dividend since 2007

Tuesday 11th June 2013

Bridgestone New Zealand, the local unit of the world's biggest tyre maker, had a decade-high profit last year, and paid its first dividend since 2007, in a year when consumer spending on cars and autoparts outpaced all other industries.

Net profit surged to $10.2 million in calendar 2012 from $1.9 million a year earlier, according to financial statements lodged with the Companies Office. The 2011 result was impacted by a $5.7 million charge on the value of its Tony's Tyre Service brand, which it bought in 2008, allocating goodwill of $9.4 million. At the time, Bridgestone said it paid a premium "as it believes the acquisition will introduce additional synergies to its existing operations."

Bridgestone's sales rose 3.5 percent to $218.5 million, while its cost of sales rose at a faster pace of 4.8 percent to $130.8 million. Employee wages were almost unchanged at $35.1 million.

The local unit's board declared a dividend of $10.5 million on March 8 this year in respect to the 2012 result to shareholder Bridgestone Australia, which is ultimately owned by Japan's Bridgestone Corp. The dividend is the first return since 2007 when it paid about $64,000, and the biggest since 2004 when it paid a $13.7 million dividend and $2.4 million supplementary dividend.

The turnaround came in a year when government figures showed a pick-up in motor vehicle and parts retailing, with a 10 percent boost in the volume of sales and an 11 percent increase in annual value, outpacing retail sales growth across all industries of 3.6 percent in volume and value terms.

The company closed its Christchurch plant in December 2009, booking a $48.6 million charge to cover laying off workers, restructuring costs and writing down the value of the land, buildings and inventory.

Bridgestone NZ bought about $122.6 million of tyres, retread materials and casings from the global group, or about 94 percent of its annual cost of sales. In 2009, before the plant was closed, the local unit's related party purchases of tyres, retread materials and casings amounted to about 60 percent of its cost of sales.

Last month, rival Goodyear & Dunlop Tyres signalled plans to sell its New Zealand retail business to local-owned Beau Ideal, handing over its 52 Beaurepaires outlets and 180 staff. Goodyear's New Zealand business focus has been switched to marketing and wholesaling tyres, and improving its services to dealers and aviation customers.

BusinessDesk.co.nz

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