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YHI to supply wheels to F1 team
YHI to supply wheels to F1 team

(2008-03-03)

By OH BOON PING

WHEEL maker YHI International will supply its Advanti brand of wheels to Formula One team Scuderia Toro Rosso (STR) - a move that is expected to raise the value of its proprietary brand.

At an interview yesterday, managing director Richard Tay said that the agreement would see the firm sponsor 400 pieces of Advanti wheels to STR over a three-year period, covering 18 races in all.

Mr Tay: Aiming to grow the production of its proprietary branded wheels to 50 per cent of its capacity by year-end and enter the car battery business under its own brand

Also, YHI has set aside some US$2 million to promote the Advanti brand for each of the next three years.

Indeed, efforts appear to have borne fruit as new and existing customers approached YHI on the distributorship of its Advanti wheels after an auto show in the United Kingdom early this year. This, said Mr Tay, is 'something that didn't happen before'.

In the race for more brand coverage, YHI will showcase the race car with its sponsored wheels at auto shows in Dubai, Frankfurt and Las Vegas later this year. Two product launches in Sepang and Shanghai are also scheduled this month and in October respectively.

There are plans to grow its tyre business, and enter the car battery business under its own brand, Neuton. If YHI succeeds in growing its distributorship network for its own brands, Mr Tay said, it would gain more pricing power.

His aim is to grow the production of the company's proprietary branded wheels to 50 per cent of its capacity by year-end. The company now produces three million wheels each year, of which more than 30 per cent are under in-house brands. YHI also provides contract manufacturing services for players such as OZ SpA, which is now 35.5 per cent owned by the company.

Separately, YHI reported a 4.6 per cent drop in 2007 net profit to $26.3 million, even though revenue rose 13.8 per cent to $426.9 million. Earnings per share fell to 4.49 cents from 4.71 cents.

This was because FY2006 included a negative goodwill charge of $5.4 million from its investment in OZ SpA. Excluding the intangible item, its net profit would have risen 19 per cent.

During the year, sales from the manufacturing business segment increased by about 36.9 per cent to $152.8 million, primarily due to increased output from additional production capacity in Suzhou.

Turnover from the distribution business segment went up 4 per cent to $274.1 million, primarily driven by stronger sales in Asean and Oceanic operations.

Looking ahead, YHI said that distribution sales were expected to remain steady, but its manufacturing segment is expected to operate in a challenging business environment.

'Global aluminium prices remained volatile. If the aluminium prices continue to remain high, it will have an adverse impact on gross margins in our manufacturing business,' the company said.

YHI said that it would consolidate and strive for continual innovation and improvements in its production systems and is now embarking on various productivity measures to mitigate the increase in production costs.

Its directors have declared a first and final dividend of 1.35 cents per share, tax exempt one tier.

《The Business Times》


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