Q : The Group achieved a record-breaking FY2010 in terms of profit after tax and turnover. You must be extremely happy. Any thoughts?
A :
2010 has been a busy year for the Group. Our continuous hard work had prevailed and we are glad that this has been translated into a set of positive numbers.
 
Our turnover rose by 20.6% to $499.6 million from $414.4 million in FY2009. That in turn helped us achieved a record $35.6 million net profit after tax, an increase of 45.3% from the year before. Once again, I would like to point out that this clearly is a testament of my team’s hard work and it also signifies the fact that we are on the right track for growth.

Q : Both the Group’s distribution and manufacturing segments did very well. What are the underlying reasons behind it?
A :
Both our distribution and manufacturing segments recorded higher turnover in FY2010. The distribution segment’s result accounted for 70.9% of the Group’s total turnover, posted a 23.8% increase in turnover, rising from $286.0 million in FY2009 to $354.2 million. The manufacturing segment also registered a healthy growth of 13.2% in turnover, from $128.4 million in FY2009 to $145.4 million.

Our team had worked hard in executing the Group’s various strategies to increase sales, capitalizing on the improved consumer and business spending in the markets we operate.

Q : Despite the positive results, is the Group concerned about factors that might derail its performances?
A : The outlook for the world economy in 2011 is mixed. In the East, Asia is growing and the momentum is strong. In the West, the US

 
  economy is still weak and Europe is facing serious sovereign debts crisis in Greece, Ireland and potentially a few more other European countries. The unrest in the Middle East and the recent earth quake in Japan have further increased uncertainties and risks that could potentially derail the recovery of the global economy and impact our business.

Aluminum prices have continued to remain high. This will have an adverse impact on the gross margins of our manufacturing business. In addition, the volatility of the US Dollars, Japanese Yen and Euro may also potentially affect our manufacturing business. However, the Group is committed to manage these challenges with appropriate hedging strategies, to control and reduce operating costs and achieve higher efficiency for a sustained performance in our business.


Q :
The Group unveiled its 5-year expansion plan recently. Care to elaborate on it?
A : The Group’s 5-year expansion plan (FY2011 to FY2015) will see us increase our production capacity of an additional 5 million alloy rims through expansion of our existing manufacturing facilities in China, Taiwan and Malaysia. We hope to capitalize on opportunities that have arisen as demands from the China and ASEAN markets are expected to grow exponentially. We feel that it is the right time to enter the Original Equipment Market (OEM) market in a more significant manner, targeting the China and Malaysia OEM markets for a start. We plan to complete installation of our first one million OEM capacity in Shanghai by third quarter of 2011.


For our distribution business, we will put into place a new marketing strategy which will involve implementing multi-brand, multi-category and multi-product sales initiatives for all of our sales offices and appointed distributors worldwide.


Multi-brand strategy enables us to achieve a wider consumer base, offering different brands for different consumer segments. By having a multi-product strategy, our sales network will offer all the product types carry by YHI, that is, tyres, alloy rims, automotive & industrial batteries, golf & utilities buggies. A multi-category strategy will broaden our product offerings of different categories such as tyres for passenger cars, light trucks, vans, trucks & bus, industrial and off the road (OTR) tyres etc. We want to take a more proactive approach to fill gaps that were in our earlier marketing and distribution strategy. We will also be opening up new distribution offices in new territories to increase our sales network.


Q :
The Group has always posted good results year in year out. FY2010 was no exception. What is your outlook for FY2011 then?
A: The Group will always strive to work harder, achieving better performances for the next financial year.

The recent unfortunate natural disasters in Australia, New Zealand and Japan have reminded us not to take things for granted. The floods in Brisbane did affect our premises and the earthquakes in New Zealand and Japan may also potentially impact our distribution business. Nonetheless, we expect the distribution segment to continue to be the key contributor for the Group.

In view of the uncertainties and potential risks in the global economy, we will continue to monitor our businesses closely, particularly on the risk of rising raw material costs and currency volatility.

Barring any foreseen circumstances, I am cautiously optimistic of the Group’s performance in FY2011.


Q :
With this set of favourable results in FY2010, what can the shareholders look forward in terms of dividends?
A : The Board of Directors has proposed a first and final dividend of 1.69 cents per share for FY2010 (1.15 cents in FY2009). The proposed dividend payment of about $9.88 million ($6.72 million in FY2009) represents about 30% of our net profit after tax. The payout ratio is the same as FY2009.


Q :
The Group is also expected to move back in the near future to a newly refurbished headquarter in 2 Pandan Road. Many see this as a sign of a new growth era and exciting times for the Group. Do you agree?
A : A definite yes! With the new headquarter, it shows our total commitment to our shareholders, customers, partners, management team and staff that we are embracing these exciting challenges and hope that we can be on track for an era of continuous growth for a long time.

Our results in 2010 were achieved by the concerted hard work and commitment of all our members in the YHI team. Moving forward, we have many tasks and challenges ahead of us, especially as we work towards implementing the Group’s 5-year expansion plan successfully. With the continued hard work and commitment put in by the dedicated team at YHI, I am confident that we will continue to produce good results for 2011 and beyond.

In closing, I would like to take this opportunity to thank our Board of Directors for their guidance and to express my sincere appreciation to our employees for their dedication and hard work. To our stakeholders – our shareholders, customers, suppliers and business associates - thank you for your unwavering support and confidence in us. I appeal to you all to continue to work with us as we build a better future.

I look forward to meeting you all at our coming shareholders’ meeting.
 

 
 

Yours sincerely,
Tay Tian Hoe, Richard
Executive Chairman &
Group Managing Director