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Apollos Expansion into S.E. Asia & E. Europe - Coggle Diagram
Apollos Expansion into S.E. Asia & E. Europe
Organisation
$2.5bn annual revenues
Worlds 16th largest tyre manufacturer by revenues
Goals
Be top 10 by 2017
Acquisition of Dunlop 2006
S Africa production facilities
marketing rights of Dunlop brand across 32 African nations
Acquisition of Dutch Vredestein Banden BV 2009
Network across europe
Cost $300m
Manufacturing sites
South Africa
Netherlands
India
1595 tonnes of tyre per day
Investing $1bn over 5 years to expand
Supplies 118 countries
South Africa 10%
Europe 23%
India provides 67% of revenues
Establish 1972
Expansion plans
Phase 1
$300m plan
Completed in 3 years
capacity to produce 16,000 passenger car radials & 1,500 truck & bus radials per day
Priority is South East Asia
Greenfield opportunities in Indonesia & Thailand
Create new factories
Phase 2
Combined with plant 1, production capacity of 24,000 car and 3,000 truck and bus radials per day
$200m plant
Not buying Cooper Tire - US based. Focusing on South East Asia.
Eastern Europe
On hold for 2 or 3 years whilst eurozone stabilizes
New greenfield sites for production
Possibly Poland or Hungary
$350m invested in plant
producing 7m units per year
$50m investing in expanding existing site in Netherlands
Boosts profits but not international expansion
Increase production from 6m to 7.5m units per year
Investing $1bn over 5 years
Current performance
South African business
Solution
Reduce marginal costs
Increase plant utilisation to 90%
Serve entire African and Brazilian markets from S African plant
Net Loss pf $10.8m 2011-2012
Causes
S Africa still in recession
Instability
Currency
Competition
Chinese imports
Up from 8-10% to 50-55%
Manufacturing costs increased
Labour negotiations in mining sector
Finance
Funding Expansion
Internal cash accruals
$150m from a qualified institutional buyer
Funding concerns
Cash and equivalents only $30m, down from $33m previous year
Downward trends
Debt to equity ratio increased 0.6 to 1.0 2008 -2012
JP Morgan advising clients of Apollo making foreign acquisitions using debt
Consolidate profits down from Rs4.4bn on Revs of Rs89.2bn, to Rs4.1bn on Revs of Rs121.9bn
Decrease in profit margins
Share price
In line with Indian market
+28% on Nifty Fifty index
+30%
Investors could see Apollo are more international and less Indian, if foreign revs and profits grow as expected by Apollo
Supply costs
32% increase in raw materials (rubber)
Weakening of auto sales growth in India
Waning global demand
Raw materials are cheaper this year
Could improve profit margins
2019
Truck Tyre Zone Malaysia
Modern technologies
Reduced costs and fuel consumption for customers
Convenient customer access to extensive services
Training centre to assist customers in purchase decisions
Managed by Sin Chu Hin
One of the top tyre specialists in Southern region of Malaysia
Demonstrates Apollo's commitment to deliver quality products and services to Malaysian Market
European Operations
Benoit Rivallant appointed president of European Operations
30 years experience in Europe, Asia and Oceanic tyre industry
Driver behind Apollo's successful introduction of commercial vehicle tyres in Europe
Will further lead the sales growth in Europe