WHEEL-MAKER YHI International has become the first Singapore company to formalise a Formula One (F1) sponsorship.

The home-grown group, led by former racing ace Richard Tay, will supply its own Avanti rims to an F1 team for the 2008 season. The team's identity can be revealed only next year.

Mr Tay, 57, who won several trophies in the Singapore Grand Prix in the 1960s and early 1970s with his No. 36 Mini Cooper S, said YHI has set aside US$2 million (S$3 million) for the sponsorship and marketing expenses to "tell the world that our wheels are on F1 cars".

"I want to gauge the results after one year, and maybe I will upgrade to a bigger name," he said, hinting that the sponsored outfit is a "small team". Besides the sponsorship fee, YHI will supply 200 Avanti rims to the team. Mr Tay said the sponsorship was a way for YHI to counter rising competition and "strengthen the brand value".

He said Chinese manufacturers have begun to make their presence felt and "it's not possible to compete with them on price". The rising cost of raw materials has been squeezing margins "as we can't pass the cost increase entirely to the consumer because of competition".

YHI incurred a 41.66 per cent fall in second-quarter net profits to $6.4 million and a 27.5 per cent drop in half-year earnings to $11.6 million.

This was because the profit for the six-month period last year was bolstered by a goodwill increment of $5.4 million from taking a stake in Italian rim-maker OZ SpA. But even without this payment, this year's interim profit would have been only 8.4 per cent higher, despite sales more than doubling to 1.3 million rims.

Second-quarter revenue rose 6.4 per cent to $108.5 million and was up 3.4 per cent at $204.5 million for the half-year. Earnings per share for the second quarter was 1.1 cents, down from 1.88 cents. Net asset value was 26.57 cents, up from 25.33 cents as at Dec 31.

Mr Tay said YHI will continue its overseas thrust, having already invested more than US$70 million in 52 countries.