Geared for growth

Ex­cited about the deal with Fu­turis

Finweek English Edition - - Kap international -

IT’S NOT A HOUSE­HOLD NAME, but chances are you’ll be sit­ting on a prod­uct made by Fel­tex Au­to­mo­tive ev­ery time you get into your Toy­ota Hilux, BMW 3-Se­ries or Mercedes C-Class, or in fact any ve­hi­cle man­u­fac­tured in SA.

Last year the com­pany sup­plied 90% of the moulded seat foam used in the lo­cal in­dus­try, 60% of the trim (such as in­su­la­tors and car­pets) and a large pro­por­tion of the leather used in car seats and door pan­els. Through strate­gic part­ner­ships with Ger­man com­pany Fehrer AG and Swiss group Ri­eter, the com­pany is the dom­i­nant player in moulded seat pads and head rests, as well as au­to­mo­tive acous­tics and ther­mal man­age­ment.

This year Fel­tex, which has a staff con­tin­gent of more than 2 000, re­ported rev­enues of al­most R900m, on the strength of dou­ble-digit an­nual growth in au­to­mo­bile sales in SA over the past three years.

Ugo Frige­rio, MD of Fel­tex Au­to­mo­tive, says that SA’s grow­ing car sales are only part of the story. “Ap­prox­i­mately 45% of ve­hi­cles sold in SA are im­ported, and we don’t sup­ply th­ese ve­hi­cles, but where we’re ex­cited is in the po­ten­tial for auto ex­ports, which will have a di­rect ef­fect on rev­enue streams.”

To main­tain its mar­ket share, Fel­tex has con­tin­ued to in­vest heav­ily in peo­ple, fa­cil­i­ties and com­ple­men­tary busi­nesses. Last year the com­pany spent R36m on up­grades at its Ross­lyn trim fac­tory, as well as a waste re­cy­cling plant in Dur­ban. In July 2006 it ac­quired Car­avelle Car­pets for R23m, and its re­cent joint ven­ture deal with Aus­tralian group Fu­turis Au­to­mo­tive In­te­ri­ors her­alds a se­ries of new in­vest­ments that will see three new Fel­tex fac­to­ries built in East Lon­don, rep­re­sent­ing a to­tal in­vest­ment of about R45m.

Of this, R22,5m will be in­vested in the joint ven­ture, while R15,1m will go to­wards a new Fel­tex Au­to­mo­tive fa­cil­ity that will con­vert the tufted car­pet blank into a fin­ished prod­uct. The bal­ance of R7,4m will go to­wards ex­pand­ing and re­lo­cat­ing Fel­tex’s moulded auto seat pro­duc­tion to the new site.

Frige­rio says the com­pany is ex­tremely ex­cited about the deal with Fu­turis: “It’s likely to add sig­nif­i­cantly to our turnover growth go­ing for­ward and we are con­fi­dent that the new fac­tory will be able to ex­pand its pro­duc­tion in the next few years on the back of ve­hi­cle ex­ports.

“Ex­pand­ing into in­ter­na­tional mar­kets could well rep­re­sent sig­nif­i­cant op­por­tuni- ties for the joint ven­ture in the fu­ture, as it’s a lower-cost op­tion to man­u­fac­ture the car­pets here rather than in Aus­tralia or the US. On top of this, since our ex­ports to the US would be duty-free un­der the African Growth and Op­por­tu­nity Act (AGOA), they would be ex­tremely com­pet­i­tive.”

Frige­rio says SA is still a rel­a­tive min­now from a global per­spec­tive when it comes to car pro­duc­tion and ex­ports, with cur­rent lo­cal ve­hi­cle pro­duc­tion amount­ing to about 520 000 units a year, or less than 1% of the global build. He be­lieves the SA econ­omy should be striv­ing for a mil­lion units a year, in line with other emerg­ing economies such as Brazil, In­dia and Aus­trala­sia.

Re­sults for the com­pany are also ex­pected to be en­hanced by the launch of the new Toy­ota Corolla and the Mercedes C-Class dur­ing the year.

Fel­tex fa­cil­i­ties in Dur­ban

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