Ultimate Tyre profits as retread market grows
Avia Collinder, Business Reporter
With Jamaicans buying more retread tyres, the Jamaica Ultimate Tyre Company Limited is expecting a record year and profits by financial year end March 2014.
General Manager Kenry Jackson reported last week that with consistent growth in the retread tyre business year-over-year, production is expected to exceed the 10,000 retread tyre record which was first broken in fiscal 2012-2013.
The cost of new commercial tyres makes retreading an attractive alternative, with savings which can rise as high as 30-40 per cent, Jackson said in emailed responses to Financial Gleaner queries.
A used tyre can be retread up to three times. The tyres used by Jamaican Urban Transit Company (JUTC), of which Ultimate Tyre is a private sector-managed subsidiary, costs about J$18,200 each to retread. Comparatively, a new bus tyre costs between J$33,000 to J$35,000 plus tax, and as much as J$60,000 for premium brands.
Five years ago, the Government liberated Ultimate Tyre from the management control of JUTC and recruited outside talent to run the operation overseen by a government-appointed board.
Losses have been cut as the exposure to the late-paying parent company has been reduced and sales to other commercial entities improved.
According to Jackson, year-to-date "profits at $23.3 million are up by 86.4 per cent above the projection of $12.5 million for April to November 2013. By March 31, 2014 projected profit is expected to be $35 million and would be the most profitable year in history."
He said that 9,550 tyres were produced between January and November 2013. Production was expected to exceed the 10,000 barrier by the end of December and, according to Jackson, that "is a significant achievement under the present economic climate".
He said that since the start of the fiscal year, Ultimate Types has produced 7,121 tyres and it is projected to reach 10,700 by March 31, 2014.
The staff at Jamaica Ultimate Tyre continues to benefit from a performance-related incentive programme, which entitles each worker to a portion of the profit based on that worker's individual performance-appraisal rating. Currently, 10 per cent of the profit is shared among workers.
The company also continues to operate a four-day workweek, which allows employees to pursue other income-earning projects, the manager said..
Jackson said that there are no significant investments plans for fiscal year 2014-2015, but the company is planning to offer a wider range of new tyres, to replace old equipment with new for improved efficiency and overall performance, and also to explore the sale of batteries.