CGS/Mitas fiscal '11 sales up, earnings down

ERJ staff report (TB)

Prague -- CGS Holding a.s., parent of tyre maker Mitas a.s., reported 28.5-percent growth to $786.5 million (Euro 641 million) in fiscal 2011, but operating income fell 23 percent to $25.3 million.

The performance of the tyre unit, which accounts for nearly 77 percent of CGS' revenue, mirrored that of the parent: sales up 32.6 percent to $603.5 million; operating income down 25.3 percent to $25.3 million, or 4.2 percent of sales, according to the firm's 2011 annual report.

CGS/Mitas chalked up the lower earnings to rising raw materials costs, although the firm said it mitigated the effect to a large degree by higher selling prices and by optimizing other costs.

The firm said demand was higher in both its major segments, agricultural and industrial tyres.

Positive cash flow throughout the year enabled a smooth beginning to the firm's new farm tyre plant in Iowa for MITAS Tyres.

As for fiscal 2012, CGS/Mitas said it anticipates growth in the U.S. economy, while the EU economy shows signs of stabilization. This should result in increased production of construction and agricultural machinery, the firm said, and a rising aftermarket.

Europe accounts for 84.5 percent of sales, CGS/Mitas said, while sales in the Americas increased three percentage points to 10.8 percent, or approximately $65 million.

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Article from Tire Business