Tyre manufacturers report first half results

A number of tyre companies have published financial results for the first half of the year, with figures varying from not-so-good to impressive. These are analysed in detail in the magazine, but some brief highlights are as follows:

Michelin: Sales were down 6 per cent to 7.348 billion Euro, but excluding currency effects, this would be a rise of 4.4 per cent. Operating profit rose one per cent to 578 million Euro and net income was 165 million Euro; below what was expected, but this was almost entirely due to charges of 178 million Euro for restructuring in Spain, where 1,200 jobs will go over the next three years.
At an analyst meeting, Michelin executives were extremely cautious concerning the outlook for the rest of the year, forecasting a drop in volume for the second half and only a slight improvement in the impact of currency fluctuations. Other obstacles to improvement are the continuing high costs of raw materials and the continuing losses of the recently-acquired Viborg chain. The acquisition was a major factor in the 0.1 billion Euro increase in Michelin’s debt, to 3.9 billion Euro.

Goodyear: Second quarter (Q2) figures reveal that the company lost $73.6 million, compared to a net income in Q2 last year of $28.9 m. Sales were up nearly 8 per cent at $3.8 billion (3.5 bn), but volumes were down half a million units to 52.8 million pieces. The single most important factor in the deterioration of operating performance was an increase in raw material costs of around, $124 million, said Goodyear, even though this was offset in part by cost reductions, improved price and mix and a positive currency translation benefit of some $9 million.
The net loss for the first six months of the year was $236.9 million (1H 2002: $34.3 million loss). The 2003 figures included a rationalisation charge of $78.6 million to cater for staff reductions, while the 2002 figures were boosted by an income benefit of around £10 million as a result of the Ford tyre replacement programme. Sales for the first six months of 2003 reached $7.3 billion; 7.6 per cent up on the 1H 2002 figure of $6.8 billion. Tyre unit volume was down at 105.4 million units (106.3 m).

Continental: 2Q results exceeded the forecasts of industry experts. Compared with 2Q 2002, turnover was down 3.4 per cent to 2.825 billion Euro (2.925 bn), but operating income rose 11.3 per cent to 216 million Euro (194 m), against a forecast of 187 million Euro.
Of the four divisions, Car Tyres, Truck Tyres and Continental Automotive Systems (CAS) all showed slight reductions in turnover compared with 2Q last year, while ContiTech was up slightly. When it came to operating income, however, Truck Tyres was the only sector to show a decrease, while the best performance came from Car Tyres, which posted a 44.2 per cent improvement.
The group’s operating margin was 7.6 per cent and, while the car tyre and truck tyre divisions were slightly below this (6.7 and 7.4 per cent). ContiTech and CAS achieved 8.5 and 9.0 per cent respectively. Industry analysts were pleased at the figures, saying that the group is exhibiting “improving internal dynamics and a favourable mix of businesses with some growth and some cash flow contributors.”

Trelleborg Wheel Systems: TWS achieved sales for the first half of the year of 1,470 million Swedish Kroner (SEK), or 160.2 million Euro. Operating profit was up 33 per cent to SEK 84 million (9.15 m Euro), compared with last year’s first half figure of SEK 63 million (6.87 m Euro). During the second quarter, turnover was SEK 713 million (77.7 m Euro) and operating profit was SEK 39 million (4.25 m Euro).
Operating profit was favourably affected by the company’s restructuring programme, an improved product mix and increased productivity. High raw material prices were partially offset by price increases, especially in farm tyres.