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Analysts Downgrade Michelin Shares to Sell

Michelin shares have dropped by 6.44 per cent following Societe Generale SA’s decision to downgrade the leading French tyre manufacturer’s stock to ‘sell.’ Societe Generale had previously rated Michelin as “hold.”

According to the analysts, Clermont Ferrand-based Michelin is about to feel the pinch of slowing sales of new truck tyres in Europe: “The European market for new truck tyres will probably slow as of 2009, given the end of an equipment cycle as well as the clear deterioration in the economic climate.” According to Bloomberg, Michelin’s share price has fallen 43 per cent this year. Societe Generale estimates the tyre manufacturer’s share price may fall to 39 euros, a 17 euros drop in its previous price target of 56 euros.

8th July 2008/by Tyrepress Editors

Conti Private Equity Acquisition Unlikely, Say DB Analysts

Shares in Continental AG have apparently declined again after rising by more than seven per cent on June 25, the result, say traders, of renewed market talk of interest in a private equity bid. The German financial newspaper named Boersen-Zeitung, Banco Santander SA, ING Groep NV and Deutsche Bank AG as the favoured contenders for bidding. The company has, however, declined to offer any information on the issue. “We don’t comment on speculation,” said Conti spokesman Hannes Boekhoff.

27th June 2008/by Tyrepress Editors

Michelin Figures Reveal Varying Fortunes

Michelin reports healthy OE sales of radial truck tyres throughout Europe in May and for the 2008 year to date. Sales for the month were 11.2 per cent greater than those of a year earlier. Sales were significantly weaker in the replacement market, were a decline of 12.5 per cent on May 2007 was reported, and in both the OE and replacement segments of the European market. During the month unit sales for these dropped 4.9 and 4.3 per cent respectively. Sales of OE passenger car tyres for the period between January and the end of May, contrary to the month’s figures, were up 3.1 per cent, while the replacement sales dropped 1.9 per cent. Truck tyre OE sales increased 14.3 per cent in Europe between January and May, while sales in the replacement market was down 4.6 per cent on the five-month period of 2007.

23rd June 2008/by Tyrepress Editors

Analysts: Michelin Aiming for 10% of Hankook

Deutsche Bank analysts have characterised Michelin’s option to buy a 10 per cent shareholding in Hankook as a “goal” and added that they expect “more concentration in the future for the tyre industry.” The fact that Michelin’s decision to increase its stockholding in Hankook only a month after Bridgestone bought 8.7 per cent of Toyo Tire & Rubber was certainly not lost on the market watchers. “A tie-up with a competitor [like Hankook] should get them: Better OE prices – The industry has been so far incapable of fully passing off raw material price increases; Economies of scale on purchasing; and a geographical advantage (Hankook being very strong in China),” the analysts surmised, concluding: “It might take time before they can duplicate a Renault/Nissan type alliance, especially as we do not know how strong if any, the relationship between Michelin and the Cho family (controlling 35 per cent of Hankook) is.”

20th June 2008/by Tyrepress Editors

US Motorists Driving Less

A sharp drop in the amount US motorists are driving, coupled with continued raw material price pressures has led financial analysts to lower US manufacturers earning predictions. Estimated vehicle miles travelled on all US roads declined 4.3 per cent year-on-year in March, according to the US Federal Highway Administration. The drop is apparently the steepest in the history of the data. This coupled with concerns about the effect of increasing raw material costs led Detusche Bank analysts to write: “In the near term, the combination of hyper-inflating raw material costs and weak demand will present major challenges for the tyre industry.”

“While we continue to see robust pricing behaviour within the industry, with price increases of “up to 8 per cent” having been recently announced by Goodyear (effective June 1) and Cooper Tire…we note that pricing may not completely offset raw material cost inflation in every quarter.”

3rd June 2008/by Tyrepress Editors

Analysts: ‘Massive’ Price Increases Needed to Offset NR Costs

Analysts have warned that tyre manufacturers will have to introduce “massive” price increases to offset the surging natural rubber cost. On 26 May the natural rubber price reached US$3.25/kg, 12 per cent above the level reached last month (US$2.90/kg); and 40 per cent above last year’s average price (US$2.30/kg). According to one Deutsche Bank analyst’s research note the price surge is surprising because natural rubber supply (9.9 million tons in 2007) still exceeds demand (9.7 million tons in 2007); and world inventories represent 23 per cent of annual demand.

27th May 2008/by Tyrepress Editors

Encircle Offers Internet Tyre Price Monitoring Service

On 1 May Birmingham-based tyre market analysts, Encircle Marketing, added an online tyre retailer price monitoring service to its portfolio. “We shall be continuously monitoring the prices quoted by centre Staff and those available online. Head to Head analysis of the traditional retail sector versus the developing online arena,” company representatives told Tyres & Accessories. Encircle Marketing currently collates over 8,000 telephone prices each month and will add to this an audit of over 3,000 online prices (each month).

8th May 2008/by Tyrepress Editors

1Q Los for Kumho to be Bigger than Planned

Kumho Tire Co. told analysts earlier this week that its anticipated first quarter loss will be larger than expected. For the first quarter of 2008, Kumho lost 36 billion won (US$36.2 million), compared with a loss of 14.3 billion won for the same quarter last year. The tyremaker’s year-over-year operating profit, though, was up 30 per cent and sales rose 15.6 per cent. (Tire Review/Akron)

25th April 2008/by Tyrepress Editors

Time To Hit The Acquisition Trail?

Hardly a day goes by without some tale or other of economic woe – the sub prime crisis, falling stock markets worldwide; all the indicators suggest that this is a time to batten down the hatches and ride out the storm. However, analysts Plimsoll Publishing have just produced their annual acquisition survey of the Tyre Manufacturers & Distributors industry and their message is that, for the strongest companies in the market, this could be the ideal time to buy a competitor.

26th March 2008/by Tyrepress Editors

Analysts: OTR Tyre Markets Remain Strong

The US credit crunch may have caused turmoil in global financial markets, but, according to Deutsche Bank analysts, the OTR tyre segment at least continues to go in the “right direction.” As a consequence of continuing high raw material prices, strong demand remains for Earthmover tyres, particularly premium brand products. According to the analysts, Michelin is planning to increase its OTR production capacity by 25 per annum over the next 4 years, and their current projections suggest that the current shortage will remain until 2012. In 2007, this business generated revenues of 1 billion euros (or 6 per cent of Michelin’s total sales). EBIT margins in this segment are reported to be approximately 35 per cent.

19th March 2008/by Tyrepress Editors

Report: Global Tyre Market to Hit 1.6 Billion Units by 2010

Replacement tyre shipments in Europe totalled 309 million units for 2007, with the global tyre market projected to grow at a compounded annual rate of over 3 per cent. According to a new report produced by Global Industry Analysts, Europe is the largest market accounting for a 29.5 per cent share of a global market that is expected to reach 1.6 billion units by 2010. OEM tyre shipments, estimated at 415 million units, account for 28.5 per cent of the global tyre market; and are projected to grow at a compounded annual rate of nearly 3.1 per cent.

18th March 2008/by Tyrepress Editors

Goodyear Top Tyre Maker in Fortune’s Most Admired List

Goodyear has secured a slot in Fortune magazine’s Most Admired Companies 2008 list. The publication surveyed executives, directors, and securities analysts to compile its list of the companies they esteem the most highly, and Goodyear received the highest ranking of any tyre manufacturer, edging Bridgestone into second place.

The manufacturer has expressed pride in the high score it received in four key attributes: innovation, people management, use of assets and global orientation. Among motor vehicle parts companies appearing on the list, Goodyear was also judged the best in regard to innovation and the quality of its products and services. “This recognition by our industry peers is something for which we are extremely proud,” said Robert J. Keegan, Goodyear chairman and CEO. “Not only did Goodyear lead our industry category, but we were ranked well ahead of our global tyre competitors,” he added.

11th March 2008/by Tyrepress Editors

Analysts: 2008 Will Be ‘Another year of Progress for Michelin’

Michelin’s full year 2007 results were “good,” according to a Deutsch Bank analyst note. Volume growth (up 3.2%) is said to be “back to trend,” with the analysts noting that the company’s true operating margin actually 40 basis points higher than the 9.8 per cent stated. This itself is a 23 per cent increase over the company’s 2006 figure. Looking forward, the Deutsche Bank report said 2008 should be “another year of progress due to: 2 per cent volume growth and raw material price increase being more than offset by increased selling prices.

21st February 2008/by Tyrepress Editors

Gajah Tunggal Plans 15% Sales Growth in 2008

Indonesia’s Gaja Tunggal Tbk is reported to have plans for increasing its sales by 15 per cent during the course of 2008. This growth will take place on top of sales revenue increases of around 20 per cent during 2006, up from IDR 5.47 trillion (£304 million).

18th February 2008/by Tyrepress Editors

Pirelli to Buy Back Tyre Unit Share in H1 2008?

For a number of months Pirelli & C SpA has openly expressed its intention to buy back the 38.9 per cent share in Pirelli Tyre that it sold to a group of six banks in 2006. An Italian newspaper, the Corriere della Sera, has in February reported that the company intends to make this acquisition before the end of the financial year’s first half. According to some analysts the share in the tyre unit, which sold for 740 million euros in August 2006, is currently worth around 900 million.

11th February 2008/by Tyrepress Editors