Analysts: Delticom profit warning a reflection of European tyre market weakness

Delticom issue a profit warning (19 July 2012) after revenues and pre-tax profits (EBIT) came in below expectations. As a result the company reduced its full-year growth target from +10 per cent to +5 per cent year-on-year and stated that an EBIT margin above 9 per cent (compared with 6.9 per cent in the first half of 2012 and 9.4 per cent in the first half of 2011) is only attainable in the event of a good winter tyre season prompted by wintery weather.

According to financial analysts the news “only highlights the weakness currently in the European tyre market” and this respect can only be taken as a warning to the rest of the market. The analysts warn that volume and price weakness could extend into 2013: “We continue to remain cautious on companies with higher relative mass end exposures…and prefer the less macro dependent [approaches]”, Morgan Stanley wrote in an investor’s note published 19 July 2012.