US tire maker leaves Venezuela after six decades in the country

24th Tuesday, May 2016 - 08:30 UTC Full article

Bridgestone says the sale will have no financial impact because it already has written off its investments in the crisis-wracked country.

All three tire makers reported losses associated with the moves, with Bridgestone at US$360 million; Goodyear, US$646 million; and Pirelli, US$615 million.

United States tire maker Bridgestone is selling its business in Venezuela after six decades in the country, the latest blue chip company to abandon the country as a result of runaway inflation and strict currency controls. Bridgestone Americas said in a statement Monday that it is selling its Venezuela assets to Grupo Corimon, a local industrialist. It says the company will be called Alice Neumaticos de Venezuela.

Bridgestone says the sale will have no financial impact because it already has written off its investments in the crisis-wracked country.

The divestiture follows the deconsolidation of BFVZ in the third quarter of 2015 and, Bridgestone said, is a strategic decision to prioritize its growth and investment in other Latin American markets, though the company did not specify what that would entail and which markets it would pursue.

Due to the company’s Venezuela operations being deconsolidated from Bridgestone last year, the divestiture will have no financial impact on it, according to the Nashville-based tire maker.

“Bridgestone is proud of the 62 years it served the Venezuelan people and wishes the best of success to the new owners of the company and to employees as they begin this next phase under new management,” Bridgestone said in a press release.

The company did not say how many workers it had in the BFVZ operation or what would happen to them.

BFVZ will now become Alice Neumaticos de Venezuela, a company managed by the Corimon Group. On its website, the company describes itself and its subsidiaries as “a Venezuelan corporation founded in 1949 dedicated to the production and marketing of a wide variety of industrial products related to the world of paints, chemical products and flexible packages—always contributing to the national development with the awareness of our responsibility towards the environment, the community in which we operate, clients, employees and shareholders.”

The company, which said it offers a “stunning range” of paints and related products, resins, inks and packaging “manufactured under the highest standards of quality using advanced technology, in harmony with the environment,” noted it “is committed to sustainable development” that allows its business units “to (grow) harmoniously, without undermining the society.”

Corimon’s website said the company “has been a pioneer in the Venezuela’s capital market,” with its shares traded on the Caracas Stock Exchange since 1979. In 1993 it became the first Venezuelan company to register its shares in the form of ADR’s on the New York Stock Exchange.

Earlier this year, Bridgestone, Goodyear and Pirelli & C. S.p.A. have deconsolidated their operations in Venezuela due to deterioration of that country’s macro-economic atmosphere, growing restrictions on the conversion of foreign currencies and the reduced availability of U.S. dollars.

All three tire makers reported losses associated with the moves, with Bridgestone at US$360 million; Goodyear, US$646 million; and Pirelli, US$615 million. The deconsolidated units’ revenue and earnings are no longer included in the firms’ overall financial results.

In Venezuela, BFVZ operates one tire plant, in Valencia, that opened in 1955 and produces passenger, light and medium truck tires, with nearly 1,300 employees.