FInnvedenBulten has confirmed it has signed a term sheet with Russian company Gaz Group whereby it intends investing approximately 6.6 million euros in return for a 63 percent ownership in a new joint venture company that will supply fasteners to the automotive industry in Russia.
The joint venture was first mooted last year. At that time the prospective partners said the agreement would provide FinnvedenBulten with its first production site in Russia. As well as supplying the domestic automotive sector it was planned that fasteners would also be exported to Bulten's global customer base.
Gorky automobile plant, which already manufactures fasteners for Russian customers, was expected to provide the production and distribution infrastructure, while Bulten would provide the development of new products and technologies.
Russia has protective trade measures on imported fasteners, which combined with the rate of growth of its domestic automotive industry, was seen as creating great opportunities for the efficient development of local manufacturing.
In its interim report for Quarter 1 2012, FinnvedenBulten reported organic growth on a weaker market. Net sales reached SEK807 million (c EUR202 million) up 1.4 percent on a strong same quarter last year. EBIT earnings were SEK40 million down from SEK54 million same period 2011, reducing the operating margin to 5 percent compared to 6.7 percent for Quarter 1 2011. Profit after tax for the quarter was SEK30 million. Order bookings amounted to SEK865 million up 3.1 percent on the same period 2011.
CEO and president, Johan Westman, attributed the negative effect for earnings on disturbances in production at the beginning of the quarter combined with extra costs incurred by Finnveden Metal Structures for the start up of new customer projects. In respect of the Bulten division he said development "remains good and after the end of the period the division signed a term sheet with GAZ Group concerning the joint venture company that will supply fasteners to the automotive industry in Russia. The automotive industry has expressed great interest in the company's establishment in Russia. The establishment is an important step in our strategy for expansion on growth markets."