Dutch manufacturer Kendrion NV is selling its automotive plastics business in hopes of stemming a flow of red ink.
The Zeist, Netherlands-based company announced the pending sale Aug. 16. The buyer is an unidentified international group. Kendrion said it expects 30 million euros ($36.5 million) from the sale of the auto plastics unit, which had annual sales of 240 million euros ($292.6 million).
This is the second divestiture for Kendrion in a year. It sold its Fardem Packaging group in 2003.
Kendrion will retain its auto metals unit, which it said has potential for long-term profitability.
``Kendrion automotive plastics does not meet the strict criteria laid down by us for the niches in which we are active,'' said the company's 2003 annual report.
The division makes interior trim and has 1,800 workers at plants in Germany, Portugal, Spain and the Czech Republic.
The unit makes up about 28 percent of Kendrion's overall business. Kendrion's 2003 sales were 846.9 million euros ($1.03 billion) with a net loss of 104.9 million euros ($127.8 million). In 2002, profit was 10.2 million euros ($12.4 million) on sales of 836.1 million euros ($1.01 billion).
``Time and again, it has been evident that the demands that are made of new [auto] products ... result in inefficiency and high production costs,'' the company reported. ``The fact that part of Kendrion automotive plastics has the position of a second [tier] supplier further reinforces that effect.''
The sale is expected to close within a few weeks. Kendrion will retain some plastics operations. Its distribution services division makes plastic sheet, tape, rod and pipe used for the building and advertising industries.