Geared for growth
Excited about the deal with Futuris
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