Europe’s biggest automaker Volkswagen said on Thursday it would expand its South African operations with investments in a plant in Uitenhage and a distribution centre near Pretoria.

VW said it would invest about €70 million ($85 million) on top of around €500 million already ploughed into South Africa over the past four years as part of its goal to become the world’s biggest carmaker.

“The Uitenhage plant plays an important role in this context,” a statement quoted VW chairman Martin Winterkorn as saying.

Production at the plant is expected to double this year as its press shop is modernised and expanded with €50 million in investment.

Another €23 million is expected to be spent on a new distribution centre in Centurion, near Pretoria, the statement said.

“Volkswagen is the market leader on South Africa’s passenger car market. Our existing investment, coupled with the new measures, lays the foundation for staying on our growth path,” Winterkorn said.

VW hopes to overtake Toyota as the world’s leading carmaker by 2018.

source: I-Net Bridge/Business Report

Popularity: 17% [?]

EMPOWERMENT icon Brimstone looks set to cause a flutter among the corporate fashionistas and perennially fashionable value investors.

This week Brimstone signalled an intention to cast off its investment in fashion retailer Rex Trueform (RexTru).

Brimstone acquired an effective 34.6% stake in RexTru in late 2007.

At last count, the empowerment company’s interest in Rextru was spread as follows: 242 654 Rextru ordinary shares and 2.6 million Rextru N-shares as well as 254 126 ordinary shares and 3.7 million N-shares in Rextru’s pyramid holding African & Overseas Enterprises.

That’s a holding roughly worth R50m, but – more importantly – a holding representing a big chunk of a company which cannot, by any stretch of the imagination, be regarded as one of the JSE’s most liquid counters.

Despite the canine connotation of Rex – having been schooled in the classics at Muir College in Uitenhage, I do know Rex is actually latin for “king” – the company is no dog. Rextru, which owns the Queenspark fashion chain, has proved a remarkably resilient (and rewarding) business over the years.

Originally, Rextru was to form part and parcel of Brimstone’s longer-term plans to build a fashion brand house around its clothing manufacturing subsidiary, House of Monatic (HoM).

I suspect that plan is no longer on the table. And Brimstone directors admit as much in commentary that accompanies the company’s recently released year to end-December results.

In reference to the Rextru investment, they noted: “Events and developments within the clothing industry and specifically within Brimstone’s clothing cluster have given cause for Brimstone to review its strategy.”

Brimstone unlikely to be panicked

In this regard Rextru is no longer considered strategic, which means Brimstone is “actively pursuing opportunities to extract maximum value” from the Rextru investment.

For those that need reminding, Brimstone’s clothing cluster was dealt a heavy body blow when subsidiary Fifth Element was liquidated after some unsavoury business practices were uncovered in an internal investigation.

In any event HoM – which thankfully does hold some valuable industrial properties – posted a loss of R30m after factoring in write-offs and expenses.

Still, Brimstone probably won’t be panicked into selling Rextru. Indeed the empowerment company, which has a strong portfolio ranging from healthcare to fishing and assurance to insurance, can afford to sit back and collect the dividends from Rextru.

I reckon, though, Brimstone has done a clever thing in “putting out” its intentions for Rextru. It certainly would not surprise me to hear that Brimstone was inundated with polite calls of enquiry from interested parties – probably ranging from larger fashion retailers to private equity specialists.

I even wonder whether former asset manager Hugh Roberts, who already holds a sizeable position in Rextru, might be tempted to harness a bigger stake?

While there should be no shortage of buyers for Brimstone’s Rextru stake, there is a question around price. When Brimstone struck the deal to buy out Old Mutual’s stake in Rextru and Af&Over, the shares were trading at around 800c and 600c respectively on the JSE.

The shares have crept up, but are still – according to my calculations – trading below tangible net asset value. NAV aside, the earnings multiple on Rextru is well below its larger peers like Foschini, Mr Price and Truworths.

In other words, I don’t think Brimstone will be looking at a 1 000c/share offer for its Rextru shares or 800c/share for its Af&Over shares.

The thing is that there is so much potential tucked away in Rextru, more specifically Queenspark, that it seems quite possible that a larger fashion conglomerate or private equity firm could well be willing to fork out a premium.

One has to consider that Rextru, run for generations as a family-controlled business, has always erred on the side of caution.

Quite striking is the fact that at last count Rextru had over R100m in the bank and a chain of around 50 Queenspark stores.

Perhaps the real potential of the business could come to the fore with a chain of 100 Queenspark stores and only R50m in the bank?

source: – Fin24.com

Popularity: 26% [?]

UITENHAGE-BORN businessman, Butityi Konki, may be in the queue to purchase ailing Port Elizabeth-based First Division soccer side Bay United.

Konki, who is International Boxing Federation lightweight contender Ali Funeka’s business manager, said he would not have a problem being the club’s new owner after United owners, Izingwe Holdings’ decision to get rid of the club.

Izingwe Holdings threw in the towel after United’s failure to return to the Premier Soccer League (PSL) next season.

“Izingwe Holdings regrets to announce that Bay United Football Club will immediately cease conducting business while beginning an extensive process that may lead to the sale of the club,” a statement released by the club said.

“I’m going to speak to my legal advisers in Port Elizabeth about whether to get involved at Bay United or not. I could be interested in the club as many people have called asking me to buy it,” said Konki.

Apart from the club’s failure to return to the PSL, the owners say there were other issues that prompted them to give up on Umlilo.

These included the PSL’s imposition of a R1.3 million liability following the club’s retrenchment of players at the end of the 2008/9 season.

Their unsuccessful attempts to get financial and other forms of sponsorship assistance from the Nelson Mandela Bay Municipality, the Eastern Cape provincial government and commercial sponsors, also contributed to Izingwe Holdings’ decision. “We will engage with all the creditors of the club, including the players. No final decision will be taken until discussions have been held with all relevant parties.

“We undertake to do our best to resolve this matter in the best interests of all parties,” said club boss Sipho Pityana.

Pityana tried to sell United to Konki after they were relegated from the PSL at the end of last season, but the deal fell through.

Pityana informed Konki last year that he was selling United for R15m, but the Johannesburg-based businessman said he was prepared to part with only R5m. “There was no way that I could pay that kind of money for a team that had just been relegated from the PSL.

“I was only prepared to pay R5m but I got no response after writing to Pityana indicating my interest,” said Konki.

- By MONWABISI JIMLONGO

source: Daily Dispatch

Popularity: 39% [?]

DIE-HARD Citi Golf fans are at war over who will win the bid for the last available VW Citi – rated as a highly collectible piece of history.

The website bidding on the iconic car started on November 3 at just R1, but by yesterday had reached R160100.

The bidorbuy website offering has received about 7000 visits, and managing director Andy Higgs said the bidding had gone much higher than expected.

The Citi’s market price is R113500.

“There are passionate fans out there – and whoever wins it will own a highly collectible piece of history,” Higgs said of the “puzzling” mathematics.

He said the bidding war was between 24 individuals, who are anonymous and can only be identified by the public by their user names. “They can use an automatic bid (to up their offer) depending on their limit.”

What made this particular car so special, said Higgs, was that it was the third-last to roll off the production line. The last two Citis produced, numbered 001 and 002, would be preserved for posterity in the Autostadt museum in Wolfsburg, Germany, and at the AutoPavilion museum in Uitenhage.

This car is one of the 1000 numbered limited-edition models. “The closing date is November 23 at 9pm. We don’t think (the bidding) will get much higher – but we might be surprised,” Higgs said.

source: The Weekend Post

Popularity: 28% [?]

Benteler Automotive, the multinational automotive component manufacturer, will invest R178 million in the Nelson Mandela Bay Logistics Park to supply parts to Volkswagen South Africa (VWSA).

The investment will create 250 jobs and increases the investment by the nine companies in the park and 25 investors in the Coega industrial development zone to R40 billion.

Founded in 1876 and based in Germany, the family-owned Benteler Group today employs almost 25 000 people at 150 locations in 35 countries. It will produce and supply dashboard carrier panels and body parts, front and rear bumpers and chassis parts directly to VWSA’s production plant located adjacent to the park.

VWSA managing director David Powels said this formed part of the company’s plan to increase the local content of vehicles built for the domestic and export markets.

“The company’s all-out initiative is to achieve 70 percent local content in its South African-produced vehicles.

“In addition to the local content benefits the company’s investment brings to VWSA, it is also beneficial to the region due to the skills transfer that will take place,” he said.

Construction started this month and production is expected to commence by mid-June next year. A total of 450 people will be employed during the construction phase.

Luis Madaleno, the managing director of Benteler Automotive South Africa, said it chose to establish itself in the logistics park in Uitenhage to be close to VWSA while the newly opened Port of Ngqura would provide the ideal base from which to export.

“Locating to this area not only benefits the company, as we can tap into the skilled workforce in the area, but we’ll also contribute to the development of Nelson Mandela Bay and the province,” he said.

Pepi Silinga, the chief executive of the Coega Development Corporation, said the investment was a massive boost for Nelson Mandela Bay and the Eastern Cape.

“The number of jobs it will create will have a very positive impact on the lives of the people in the region,” he said.

Benteler SA is the ninth investor in the logistics park.

VWSA announced a year ago it had attracted several key national and international component manufacturers to set up operations in Uitenhage. It said about R1bn would be invested in new facilities by the middle of this year, which would create 1 000 jobs.

VWSA spokesman Bill Stephens said on Friday that facilities established by interior plastic component manufacturer Faurecia Interior Systems, side mirror and cable manufacturer Flextech, bumper manufacturer Rehau Polymer and headliner and door panel manufacturer Grupo Antolin were already operational.

Stephens said metal pressing parts manufacturer Bloxwich, which had planned to invest in the park, had been a casualty of the global financial crisis.

Bell-Essex Corporation’s factory, situated next to the VWSA plant but outside the park, would be completed shortly, he added.

Other park investors are plastic fuel tank manufacturer Inergy and logistics companies Mediterranean Shipping Company and Schnellecke.

By Roy Cokayne

source: Business Report

Popularity: 50% [?]

By Roy Cokayne

Despite the troubles in the automotive industry, global tyre company Goodyear Tire and Rubber Holdings has decided to invest R70 million in its Uitenhage plant.

The investment will equip the factory to produce three new and apparently technologically superior tyre products, including one specifically aimed at the minibus taxi market.

Jean-Jacques Wiroth, the managing director of Goodyear, said last week that this investment, in difficult economic times, reinforced Goodyear’s commitment to South Africa and sub-Saharan Africa, which was regarded as an important and independent hub in the Goodyear world.

Wiroth said it was investing not only in its Uitenhage plant to produce the new products with new machinery, new moulds and various continuous improvement projects, but also in people and distribution channels, through continuous training and development.

He said the factory made products of world-class quality. It was proud that 90 percent of its production was sold locally, through a wide footprint of well-established distribution channels across sub-Saharan Africa.

Wiroth said new products were the lifeblood that ensured the consistent improvement of any business. New product drove Goodyear’s business and consequently it would increasingly produce new products.

Myles Dent, Goodyear’s marketing and communications manager, said the new products covered three different areas of application, with each representing a specific innovation.

Through the launch of the new products in South Africa, he said, Goodyear was comprehensively extending its range.

Goodyear said its new Duramax G22 could take on the most demanding road and traffic conditions and had been “engineered specifically for South Africa’s bright, brash and breezy minibus taxis, which are particularly hard on their tyres”.

Its new DuraGrip had been developed to cope with all the stop-start pressures of constant city driving in all weather conditions. The third new product, the Wrangler AT/SA, provided exceptional on- and off-road performance in wet and muddy conditions, while high-tensile steel belts improved the tyre’s strength and resistance to punctures.

Published on the web by Business Report on April 27, 2009.

Popularity: 20% [?]