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Pirelli Broadband Solutions Sale Finalised

Pirelli’s sale of its broadband business is a done deal. On November 29, the Italian company reported the sale of Pirelli Broadband Solutions SpA to Advanced Digital Broadcast Group has been finalised and the transaction is now completed and closed. Advanced Digital Broadcast paid approximately 25.1 million euros in cash and 400,000 listed shares, equal to approximately 7.2 per cent of its capital, for the broadband business. With regard to these shares, Pirelli & C. has undertaken a lock-up commitment for the first two months following the closing, as well as a put option for Pirelli & C. and a call option for ADB, which can be exercised within two years.

30th November 2010/by Tyrepress Editors

Hankook Stock Falls 2% After Rating Cut

Despite earlier positive news about the second phase of production at the company’s Hungary plant reaching the production readiness ahead of schedule, Bloomberg reports that Hankook Tire Co. shares dropped 2 per cent to 29,100 won during trading on 17 November 2010.

17th November 2010/by Tyrepress Editors

Pirelli Triples 9-month 2010 Net Income to 164.1 million euros

Pirelli & C Spa reports that it tripled net income to 164.1 million euros during the first three quarters of 2010 from 50 million euros in the first nine months 2009. At the consolidated level, revenues to 30 September 2010 totalled 3,703.4 million euros, an increase of 18.9 per cent compared with 3,114.7 million euros in the first nine months of 2009.

EBIT to 30 September 2010 including restructuring charges of 12.4 million euros (28.1 million 30 September 2009) was 309.6 million euros, an increase of 69.7 per cent from 182.4 million euros in the same period of 2009. The margin as a percentage of revenues (8.4 per cent) shows a significant improvement from the 5.9 per cent recorded in the first nine months of 2009. In the third quarter, in particular, the operating result (EBIT) including restructuring charges was 116.2 million euros, growing 82.7 per cent from 63.6 million euros in the third quarter of 2009, with the margin as a percentage of revenues rising to 9.1 per cent from 5.8 per cent.

4th November 2010/by Tyrepress Editors

Nexen Aiming to Produce 20 million Tyres in Qingdao by 2017

International News

Nexen’s Qingdao, China tyre production plant, which started manufacturing tyres in 2008, will soon enter the black and could be producing as many as 20 million tyres a year by 2017. Korean tyre manufacturer Nexen Tire published the latest details in a recent internal newsletter emailed to staff and customers, where the factory’s management also gave details of Nexen’s plans for the plant.

Based on a site one hour’s drive north of Qingdao Airport in Shandong Province, China, Nexen representatives describe their most modern plant to date (the firm broke ground on a further plant in Gyeongnam Province, South Korea on 24 June 2010) as the company’s “ambitious masterpiece.” With output currently reported to be 6 million truck, bus and car radials a year and bearing in the mind the fact that it already occupies a 530,000 square metre area with further expansion still to come, it is clearly a significant operation.

2nd November 2010/by Tyrepress Editors

Indonesia/Malaysia Home to Thriving Tyre Retail Markets

International News

As the Asian region’s car parc continues to swell in the wake of economic recovery, the demand for aftermarket products and services is also said to be increasing. GfK Asia, which conducts retail audits in the automotive aftermarket in major Asian cities like Bangkok, Kuala Lumpur, Jakarta, Manila and Seoul, recently looked into the relationship between car “populations” in these cities relative to the number tyre servicing garages and compared the saturation levels in differing economies. While each tyre servicing garage in developing cities such as Kuala Lumpur, Bangkok, Jakarta and Manila serviced an average of 2250 vehicles, this figure is almost halved, at 1172:1 in a “developed” city such as Seoul. The Malaysian figure is almost four times the 674:1 average ratio GfK published in April 2009.

2nd November 2010/by Tyrepress Editors

Michelin and Rodi to Form Alliance in Spain

International News

Michelin Spain has announced that it has initiated talks with Rodi, a leading tyre dealer in the Catalonia-Aragon region, on the subject of forming an alliance in the region. According to the company, the partnership would involve shareholdings and marketing ties, in particular through a cooperation agreement between Rodi and Euromaster. Under the agreement, Rodi would continue to operate in Catalonia-Aragon under its current tradename, with the addition of the label, “Member of the Euromaster Network.” Michelin expects the talks to be concluded and an agreement reach by the end of the year.

27th October 2010/by Tyrepress Editors

China Tyre Industry Targeting Complete Radialisation by 2015

On 12 October China’s Ministry of Industry announced a new policy for the local tyre industry aimed at promoting environmentally friendly and energy-efficient development but it looks likely to have a knock-on effect on global players as well. One of the key points of the policy is that it sets out radialisation targets for each of the main product sectors. By 2015 the passenger car segment is expected to reach 100 per cent radialisation, with a 90 per cent goal for heavy truck tyres and 85 per cent for light truck tyres.

26th October 2010/by Tyrepress Editors

Analysts Predict Michelin Will Invest in Chinese Tyre Production

Referring to Michelin’s recent surprise decision to raise 1.2 billion euros of fresh capital, financial analysts at Morgan Stanley have predicted that the company is planning to expand its Chinese tyre manufacturing base, making this operation “a crucial BRIC[k]in Michelin’s future.”

When Michelin announced its plans to raise fresh capital on 28 September the tyre maker did any indications of what it planned to do with the money. This led analysts to suggest that “China will be a major focus for Michelin.” They believe Michelin is looking for “a swift increase in Chinese capacity” from their current level of around 2-3 per cent of output.

26th October 2010/by Tyrepress Editors

Analysts Welcome Pirelli Broadband Sale, Expect Aggressive Capital Investment

Despite affirming that Pirelli’s recent sale of its broadband business confirms the company’s focus is on its tyre operations, some financial analysts have responded by saying Pirelli’s stock sentiment has peaked for the time being. Their thinking is that the company is on the brink of announcing a series of capital expenditure investments. In response to news that Pirelli sold its broadband operations to ADB for 30 million euros, a Morgan Stanley investor’s note said: “We valued the business at 13 million equity value, the sale price is 30 million (the difference is irrelevant for the share price).”

22nd October 2010/by Tyrepress Editors

Pirelli Sells Broadband Business to ADB for 30 million euros

Pirelli & C has sold its broadband business to Advanced Digital Broadcast Holdings (ADB), a company quoted on the Swiss stock exchange for 30 million euros. Analysts received the move as confirmation that the company is wholly dedicated to its tyre business after the separation of its real estate arm earlier this year. The deal was announced on 21 October hours after the company confirmed that Prelios (the new name for Pirelli RE) would make it stock market debut on 25 October.

21st October 2010/by Tyrepress Editors

Analysts: Michelin Rights Issue ‘Overly Prudent’

Michelin’s unexpected decision to announce a 1.2 billion euro rights issue at the Paris Motor Show on Tuesday 28 September may have knocked confidence in the company’s free cash flow generation amongst those observers that are concerned the company is being too cautious. But question marks also remain over what the company’s strategy is here. In the trading session following the announcement, Michelin shares dropped by more than 8.0 per cent according to the AFP News agency.

30th September 2010/by Tyrepress Editors

Natural Rubber Shortage Will Bring More Tyre Price Hikes

Calling it the worst natural rubber shortage in years, industry analysts expect record shortages to continue into next year, according to reports. Heavy demand by tyre-makers around the globe coupled with a combination of drought and heavy rains in plantation areas has sharply reduced output and inventories of natural rubber, according to Bloomberg, with analysts saying natural rubber production will continue to lag for the next two years. What that means is further increases in natural rubber costs to tyre-makers, and higher finished good prices for tyre dealers and consumers.

21st September 2010/by Tyrepress Editors

Morgan Stanley Upgrades Michelin to Overweight, Doubles Target Price

Morgan Stanley analysts have upgraded Michelin shares to “overweight” and more than doubled their target price from 36 – 80 euros, commenting that the French tyre manufacturer “can surprise again.” This means analysts believe Michelin will beat consensus earning projections by more than a fifth: “We expect earnings to come in 20-25 per cent above consensus and cash generation to surprise significantly.”

In an investors note published 25 August, Morgan Stanley’s Eduardo Spina explained that the upgrade is based on the fact that while Michelin stock trades at a roughly 25 per cent discount historically, “high earnings visibility” and pent-up demand contribute to making it attractive. As a result Spin predicts that earnings per share will ramp up to 10 euros by 2012, 25 per cent above the consensus of 8 euros by the same point.

26th August 2010/by Tyrepress Editors

Conti Develops Smartphone TPMS Software

Continental’s tyre pressure monitoring system will soon be able to report to smart phones via pressure sensors in intelligent tyres. According to the company, the “filling assistant” system also lets the driver know when they reach the right pressure during inflation. Conti expects users to experience “enhanced driving safety and fuel efficiency” as a result of the system. The first series production of the Filling Assistant in new vehicles is expected from 2013 onwards.

The application, developed by Continental’s Interior Division, communicates wirelessly with the smartphone and specifies the exact inflation pressure of each tyre using a brief honk and blink signal can be given to confirm when the tyre has been inflated to the correct pressure level. Technical requirements for the system are a tyre pressure monitoring system with the corresponding sensors in the tyres and factory-integrated vehicle electronics with a wireless interface.

25th August 2010/by Tyrepress Editors

Indonesia Increasingly Attractive to Hankook

Financial news sources reporting on the rising wage demands of China are suggesting that South Korean companies, including tyre-maker Hankook, are gravitating towards Indonesia on the back of increasing stability in the country. Kang Chang-hwan, the company’s Finance and Management executive vice president in South Korea, told reporters “We are now looking to get the necessary regulatory approval from the Indonesian authorities to go ahead with the plant though the site has yet to be decided,” following a meeting with investors after Hankook published its second quarter financial results.

12th August 2010/by Tyrepress Editors