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Cooper’s Albany Closure Savings Higher Than Expected – DB

Analysts at Deutsche Bank admitted on December 18 that the magnitude of cost savings from the closure of Cooper Tire’s Albany factory is higher than the bank initially expected. Cooper stands to save between US$75 million and $80 million per annum after costs linked to the closure are taken into account, however Deutsche Bank doesn’t expect Cooper Tire to achieve the full run rate of cost savings until the fourth financial quarter, as timing of employee departures and transition/inefficiency costs related to the plant shutdown, such as employee wages and benefits, mask the majority of the variable cost savings.

19th December 2008/by Tyrepress Editors

Nokian Using Russian Capacity in Difficult Market Conditions

Nokian’s decision to reduce its Finland-based tyre production output from 6 million to 4.5 million tyres will be coupled with increased Russian capacity, financial analysts have reported. According to a recent Deutsche Bank report, “[Although] current demand is smaller than Nokian’s capacity…Nokian is reacting quickly by reducing capacity in order to maintain a high proportion of high priced products.”

10th December 2008/by Tyrepress Editors

US Government Likely to Support Automaker Rescue

Outgoing president George Bush’s administration has reportedly reached a tentative agreement with democratic leaders to help carmakers GM and Chrysler stay afloat. The announcement follows the news that 533,000 jobs were lost in November and president-elect Obama’s announcement of the US’s biggest infrastructure investment since the US highway system in the 1950s. Obama has not to put a full cost on his plan advisers estimate it will be over $700 billion (£477 billion) and could even top to $1 trillion.

Deutsche Bank analysts suggested the LTFVUSA Act (Long term Financial Viability of US Automakers) would be comprised of two rounds of financing: “Short term bridge financing that would carry the automakers through 31 March and longer term funding that would be predicated on the plans for long term viability, which will be assessed by an auto industry financial viability advisor.” The effect the latest plans will have on declining OE tyre orders is far from clear.

8th December 2008/by Tyrepress Editors

Analysts: Slowdown May Cause Russian Tyremaker Growth

Following several years of consistent sales increases, full year 2008 figures may hit show a drop in Russian passenger car tyre sales by value. The profitable premium segment, which is dominated by non-Russian premium manufacturers, is expected to be the first to feel the pinch. On the other hand, the share of the market occupied by budget products is likely to increase, and some sources predict that Chinese and Korean tyre sales will be replaced by domestic Russian tyre makers’ products.

19th November 2008/by Tyrepress Editors

A-V ‘Negotiating’ With Suppliers

When the Sibur/Amtel-Vredestein (A-V) merger ground to a halt at the end of September, A-V’s lack of working capital meant it was forced to suspend production at its Kirov and Voronezh Russian manufacturing facilities. According to the most recent update, released just under a month later on 24 October, production has been suspended ever since. However, the latest reports are suggesting the company is exploring a number of creative solutions to A-V’s increasingly costly production stalemate. Meanwhile production has continued at normal levels at the un-affected Dutch part of the company, Vredestein Banden BV.

In an effort to kick start production at its Kirov and Voronezh production plants (which produce nearly 9 million tyres a year) Amtel-Vredestein is negotiating a raw material for finished product barter agreement. These plans are said to be in addition to the obvious way of reducing the high levels of debt under which the Russian part of the group continues to operate -selling the company’s assets, divisions or the group as a whole.

12th November 2008/by Tyrepress Editors

2009 Set to be Turbulent Year for Tyre Market

2009 is set to be a tumultuous, but “exciting” year for the UK tyre market. According to data supplied analysts at Plimsoll Publishing, UK tyre manufacturers and distributors need to be ready and prepared for a series of unique opportunities that will present themselves in the year ahead.

The overall tyre financial conditional of tyre manufacturers and distributors “is not in bad shape,” say Plimsoll. Sales growth is running at a little over 2.6 per cent, which is actually up on the previous year. However, it is not clear whether the latest data takes into account the full extent of the credit crunch. As the report says, “even the most bullish of companies will need to rethink for 2009.”

11th November 2008/by Tyrepress Editors

Canadian Tire Include Bread, Milk in Product Line Up

Canadian Tire has announced that it will open two experimental stores that will push the boundaries of which products a tyre retailer chooses to stock. The “smart store” concept will be tested in new locations in Welland (Niagra) and Orleans (Ottawa), both of which are due to open in the middle of November. Newly available products will include foodstuff, such as bread and milk, though many other product lines are planned. The idea is not without precedent; Canadian Tire stores already sell sporting goods, household appliances, gardening products and clothing and footwear, in addition to snack foods and cleaning products.

29th October 2008/by Tyrepress Editors

“UK Car Dealer Numbers Will Decline” – Analysts

There will be significantly fewer car retailers operating in the UK in the years to come, as a result of vehicle manufacturers tightening control over dealership standards, according to analysts PricewaterhouseCoopers. Chris Kent, a director in the automotive team at PricewaterhouseCoopers, will be presenting at the forthcoming EurotaxGlass’s conference entitled ‘Driving Business – opportunities for profit and growth in an uncertain market’.

Speaking ahead of the event, he said that many more dealers are expected to follow those that have already closed their doors this year. The theme will be explored in greater detail at the event, being staged on 13 November at the National Motorcycle Museum in Birmingham.

23rd October 2008/by Tyrepress Editors

Tyre Companies are Prime Takeover Territory

A new report is suggesting that the effects of the wider financial meltdown are going to result in a series of takeovers and sell offs that will “sweep the market.” According to the Plimsoll Publishing report, a combination of needs is forcing smaller companies to consider selling to their larger rivals and larger players are looking to buy their smaller rivals to diversify and develop their businesses.

“It has a great deal to do with necessity. Many of the larger players in the market, despite the downturn, are desperate to find new ways to develop their business, but with the current climate, costs are being cut and business development is being slashed. So they need options to help them protect their futures and tap into exiting revenue and profit streams. Financing a series of small acquisitions at key niche players in the market will give them: a quick route to increasing sales for relevantly low cost; and a foothold in the emerging sectors of the market,” senior analysts David Patterson commented.

14th October 2008/by Tyrepress Editors

Analysts: Natural Rubber Price Dropping

Natural rubber prices have dropped 20 per cent to US$ 2.30/kg (RSS3 grade) during the last 10 days. According to Deutsche Bank analysts this brings the market back to the average price of 2007 and 18 per cent below the average price of 2008 (US$ 2.8/kg). For large scale companies like Michelin, the price cut is expected to filter through to profits and loss reports in the second quarter of 2009. According to the analysts, every $0.01 change in natural rubber prices makes a $9 million impact.

7th October 2008/by Tyrepress Editors

Settle for Reduced Margins or Scale Down

UK tyre market analysts, Plimsoll Publishing are characterising the difficult market conditions of 2008 as a recipe for failure, with companies facing a stark choice: hold on to sales at reduced margins, or reduce in size and scale. To put this into context, 67 of the 201 firms analysed in the company’s latest report are losing money, a direct consequence of rising costs and price reductions set against a slowing market. The net effect? Increased merger and acquisition activity.

Senior analyst David Patterson points to the amount of tyre manufacturers and distribution firms using an overdraft as a permanent means of finance as a dangerous position for any companies to place themselves in. The banks are taking a critical look at all unsecured finance and are reassessing their exposure to small businesses- this could leave these firms in a position where their overdraft would need paying back on demand. Acording to Patterson, many of these firms simply cannot afford to do this.

1st October 2008/by Tyrepress Editors

Accuride President Resigns, Company Restructures

Accuride has announced the resignation of John Murphy as president and CEO and director of Accuride, effective 22 September 2008. Upon acceptance of Murphy’s resignation, Accuride’s board of directors appointed William (Bill) Lasky as interim president and CEO. At the same time, the wheel manufacturer also announced that it is embarking on restructuring programme that will eliminate a total of 392 positions, or 11 per cent the company’s workforce. This includes 159 salaried positions (18% of current level) and 233 hourly employees (9% of current total).

As a result of the restructuring programme, the Company expects to incur a one-time restructuring charge of approximately $14.3 million in the third quarter of 2008 of which a total of $10 million will impact cash during 2008 and 2009. However, the company expects that the restructuring will save an estimated $6 million in 2008 and generate annual cost savings of approximately $27.5 million thereafter.

25th September 2008/by Tyrepress Editors

Michelin Purchase of Conti Tyre Division Not Feasible – Analysts

Any idea Michelin has of purchasing Continental AG’s tyre business will most likely die quietly, as analysts have poured cold water on the possibility that such an arrangement would be permitted. A number of analysts have been quick to point out that a purchase of Conti’s tyre business would be seen frowned upon; it would, after all, leave the resultant company holding 40 per cent of the European passenger car tyre market and more than half of the truck tyre market. Michael Punzet, an analyst with DZ Bank, commented to Forbes that the European Commission would thus most likely not give approval as it would break competition rules.

23rd September 2008/by Tyrepress Editors

Afghan Tyre Smugglers Hurting Karachi Businesses

Pakistani news sources are reporting that Karachi industry, importers and manufacturers are feeling the malevolent effects of smuggled tyres coming across the border from Afghanistan. The contraband products are flooding the local marketplace, leading to a reduction in the share local businessmen can hope to attain.

According to reports, Pakistan has a demand for more than two million passenger car tyres annually, and as much of 70 per cent of this market is satisfied by tyres smuggled into the country through Afghan Transit Trade. An estimate by analysts puts a figure of one billion rupees (7.2 million pounds sterling) on the loss to the national exchequer as a result of this activity, in addition to the obvious harm caused to the local economy.

19th September 2008/by Tyrepress Editors

Goodyear Shares Struggle with “External Forces”

Tuesday saw a significant drop in the price of Goodyear shares on the NYSE, leading analysts at KeyBanc Capital Markets to drop their company rating from “Buy” to “Hold” and lower 2008 earnings estimates on the stock by 30 cents (to $1.90 per share). Afternoon trading resulted in Goodyear shares dropping $2.36 (12 per cent) to $18.05.

10th September 2008/by Tyrepress Editors