National Tyres revenue falls 11 percent
Business Reporter
National Tyre services revenue for the half year to September 30, 2014 fell 11 percent to $7,4 million on the back of price adjustments aimed at stimulating demand. The company said the price adjustments were effected at company level and by some of its suppliers. Revenue fell despite a 5 percent decline in overheads as a result of productivity enhancement combined with strategic cost management. Profit for the period came in at 32 077.
This, according to the company was achieved in a difficult environment characterised by declining disposable incomes, softening consumer demand and increased competition.
“Industry rivalry intensified while consumer’s purchasing power was largely skewed towards lower priced goods and services. The company continued to respond to these challenges in order to preserve value for all stakeholders,” the company said.
In terms of performance the retail and service sectors saw a marginal decline in units of new tyres due to diminishing buying power of consumers and the migration to lower priced products.
“A product offering for this growing market segment was introduced towards the end of the period.
“The Tyres-On-The-Go distribution channel contributed to volumes and revenue is expected to continue growing,” the company said.
Services recorded growth as a result of expanded service offering at all the company’s service centres as well as continued confidence in the company’s service quality. The re-treading division saw a decline in unit sales of compared to the same period as well as a declining gap between premium retreads and bottom tier truck tyres.
Going forward, the tyre company said it expected the trading environment to remain constrained and efforts would be channelled towards achieving growth.
“The company will continue to pursue volume and revenue growth, sustain the cost management and productivity enhancement programme and mitigate financial risk in order to deliver value to stakeholders,” it said.
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