By Oliver Hall
Edinburgh based tyres retailer Kwik-Fit suffered a fall in profits last year. After allowing for a loss of £11m on the sale of its German division, annual profit last year fell to £87.4m
The fast-fit tyres chain is also struggling to support huge debts which at the year end totalled £811m. French private equity owners PAI were forced to inject £20m into the tyres business to prevent it breaching borrowing covenants.
The company is now attempting to reduce the net debt by finding a buyer for its insurance arm.
Kwik-Fit is suffering from difficult trading conditions. In its fleet car tyres contracts, which are mostly at fixed prices, a weakening pound and raw material increases have squeezed profits.
However, a bigger long term issue, is the fact that the company is facing fierce price competition from on-line competitors such as Cambridge-based etyres which operates a lower cost business model.