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Published on September 5, 2005

New identities: Two African tire manufacturers change names, technical partners

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Date Published September 5, 2005

Two of Africa's tire makers-Firestone East Africa Ltd. in Kenya and Addis Tyre Co. in Ethiopia-have changed identities and technical partners.

Firestone East Africa, originally a subsidiary of Firestone Tire & Rubber Co. founded in 1969, recently changed its name to Sameer Africa Ltd. It is severing ties with Bridgestone Corp. and seeking a new technical supply partner.

Addis Tyre, a relatively small independent maker dating back to 1972, is now Matador-Addis Tyre, majority owned by Matador A.S. of the Slovak Republic. The ownership change meant Addis severed technical ties with Yokohama Rubber Co. Ltd.

Sameer Africa's technical agreement with Bridgestone will expire Sept. 30 and won't be renewed, according to Sameer Africa Chairman Naushad Merali's statement in the company's 2004 annual report.

Instead, the firm intends to strengthen the company's technological capability and build on its expertise that spans 35 years, Merali wrote. Sameer Africa has opportunities to build new strategic alliances with technical partners so it can keep up with global tire trends, he wrote.

A Bridgestone spokesman in Tokyo said the cancellation of the contract to provide technical assistance to Sameer Africa also was followed by the cancellation of the contract between Bridgestone and Sameer to use the Firestone name. However, Bridgestone will keep Sameer Africa as a distributor and plans no changes in its business operations in Kenya.

Sameer Africa will create a new brand name for its products, according to reports.

Bridgestone holds a 14.9-percent share in Sameer Africa while Sameer Investments Ltd. owns a 64.9-percent share. Bridgestone didn't say if it intends to sell its share.

In 2004, Sameer Africa's net earnings surged 75.5 percent to $3.45 million compared with 2003 levels. Sales rose 28.8 percent to $41 million. Tire sales also jumped 30.7 percent from 2003 to $38 million.

The positive results occurred despite a 14-percent increase in material costs caused by rising raw material and petroleum prices as well as increased power costs, according to Merali. The firm's profitability improved because of increased sales, greater factory efficiency and prudent cost management, he said. A greater focus on export markets also helped as sales in that sector climbed 57 percent.

Sameer Africa also made a capital investment of $2 million to upgrade and expand its truck and bus tire facility in Nairobi. Besides tires, Sameer Africa produces tubes, flaps and tire mounting grease.

Matador's joint venture agreement with Addis Tyre dates back to 2004 but only recently the firm disclosed plans to invest $40 million in the Addis Ababa, Ethiopia, plant to add radial capacity and double annual output to 500,000 units by 2006 and to 1 million units by 2008. Radial capacity should eventually supplant bias-ply, which makes up nearly all of the site's capacity now.

The expansion will allow Matador-ATC to expand its export business into the countries of the common market of East and South African states and pursue a goal of boosting its domestic market share to 50 percent, according to Matador President Stefan Rosina. Matador owns 61 percent of the venture, which also operates its own rubber plantation.

In addition, Matador operates a joint venture firm in Russia with Omskshina.

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