Firestone disposing of unprofitable investments

Press, 23 August 1979, Page 18

Firestone disposing of unprofitable investments

NZPA-Reuter Akron, Ohio

Firestone Tire and Rubber Company, reporting lower third-quarter profits, said it had decided to dispose of its unprofitable Australian business and was taking a hard look at other of its overseas companies.

The No. 2 American tyre maker said it was “studying the Viability” of certain, unsj. ified foreign businesses, and hoped to decide by October 31 about whether to retain them.

Firestone did not identify the companies being studied, but reported that its European business remained unprofitable. As far as Firestone N.Z., Ltd, is concerned, a spokesman for the Christchurch company said that its circumstances, and profitability were far different from those of the Australian, and European companies. Firestone N.Z., which has capital of SIO.IM, of which

$2.4M, or 24 per . cent is owned by New Zealand investors, is expanding, rather than reducing its activities. No details were given of how it planned to dispose of its 70 per cent of Firestone Australia Pty, Ltd, tyre and rubber products manufacturer.

The chairman (Mr Richard Riley) commenting on the Australian decision, said, “Changing market conditions, and industry over-ca-pacity have led us to conclude that management time and available capital could be invested more profitably elsewhere.” Increased Australian imports had reduced the company’s tyre and rubber products business there, Firestone estimated the cost of disposing of its Australian company to be S9M. However, it also said it appeared that the company would not have to use all of the 5344 M set aside last

year for the' recall, in the United States, of steel-belted radial tyres, whose safety was questioned by United States Government officials, and for phasing-out some activities.

Firestone said the savings likely would “equal or exceed” the cost of discontinuing the Australian and any other businesses. Firestone profits in the three months to July 31 were 510.4 M, down sharply from $15.9M in the same period last year, despite an 8.3 per cent rise in sales to SI3OOM. However, for the first nine months of its fiscal year, the company had profits of $77.8M, compared with $51.9M for the first nine months of last year.

Third-quarter results were reduced by sluggish demand for tyres in the United States, reflecting uncertainties about petrol supplies.