Stamford Tyres Corp Ltd’s Latest Business Performance: What Investors Need to Know

Established in the 1930s, Stamford Tyres Corp Ltd (SGX: S29) is one of the biggest independent tyre and wheel distributors in Southeast Asia with distribution centres in many parts of Asia. The major brands of tyres it distributes are Falken, Dunlop, Continental and Maxam.

Last week, the company delivered its financial results for the second quarter ended 31 October 2017. Let’s take a look at how it performed during the latest period.

How much did the company bring in?

Revenue for the quarter grew 2.3% year-on-year to S$59 million. The improvement was mostly due to higher sales in Australia and the Southeast Asian markets.

Gross profit margin rose from 26% in the corresponding period last year to 26.1% in the latest quarter. This was mainly due to value-added activities at its Stamford Tyres Mart retain chain and truck tyre centres.

The share of results of joint ventures surged 82.7% to S$793,000 due to improved performance from the joint ventures.

As a result, the bottom line increased 10.4% to S$1.6 million, even though total operating expenses went up by 3%.

How much cash does the company have?

As of 31 October 2017, Stamford Tyres had S$18.7 million in cash and cash equivalents, and S$90 million in total debt. This translates to a net debt position of around S$71 million, an improvement from the net debt position of S$76.2 million, as of 30 April this year.

Moving on to the cash flow statement, the company generated S$4.4 million in net cash from operating activities. It spent S$1.3 million in capital expenditure, giving a free cash flow of S$3.2 million for the latest quarter. A year ago, it raked in higher free cash flow of S$5.8 million.

What is the company’s outlook?

The president of Stamford Tyres, Wee Kok Wah, commented:

“The operating environment in the tyre business remains challenging as a result of global oversupply and intense competition. We continue to focus on growing our sales of car tyres and SSW wheels, as well as truck tyres and mining tyres. We are also focusing on improving our sales productivity and value-added segments such as Stamford Tyres Mart retail chain and truck centres”.

SSW Wheels is Stamford Tyres’ proprietary brand, which also includes Sumo Firenza and Sumo Tire.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.