R100-m loss for Wesco

Wesco Investment, the holding company that owns 25 per cent of Toyota SA, has made an attributable loss of R106,3 million for the six months to September.

Wesco Investment, the holding company that owns 25 per cent of Toyota SA, has made an attributable loss of R106,3 million for the six months to September.

Wesco, which is also the holding company of motor component Metair, made R3,7 million profit last year. According to , Wesco said the loss was the result of Toyota SA’s loss of R183 million in spite of significant revenue growth.

As CARtoday.com reported earlier this year, Wesco sold a 39 per cent stake in Toyota SA to Toyota Motor Corporation of Japan for R994 million, taking the Japanese company’s stake to 75 per cent.

Toyota SA, in turn, made large local investments in the last interim period. For example, it invested R3,5 billion to set up a programme to export the recently-launched Corolla to the Australian automotive market.

Elizabeth Bradley, Wesco’s executive chairman, said the firm was aware large investments would knock profit before returns were made.

Revenue was up 17 per cent to R4,5 billion, but gross profit dropped 89,8 per cent to R27,9 million and margins were under continued pressure as a result of the adverse exchange rate, Bradley said.

Economist Tony Twine said the “run out of the previous-generation Toyota Corollas during the first nine months of this year” had contributed to lower than optimal revenue.

"The situation will be reversed with the introduction of the new Toyota Corolla," said Twine, adding that exports to Australia should restore Toyota SA’s profits, boost sales growth and help create the base load that was needed to run a factory of its size on a profitable basis.