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‘Wind of Change’ Blowing at Amtel

Deutsche Bank analysts have upgraded their rating for Amtel-Vredestein from Hold to Buy, suggesting a 12-month target price of $7.97. “We forecast the pre-tax profits (EBITDA) margin to improve from 12 per cent at present to 15 per cent in 2009 on better retail margins and the cost benefits of producing premium tyres domestically,” the analysts reported.

Deutsche Bank predicts company revenues will grow at a compound annual growth (CAGR) rate of 8 per cent to $1.6 billion in the next eight years. By 2015 EBITDA is predicted to grow to as much as $241 million on the back of increasing sales of Vredestein tyres in Russia and expanding retail operations.

“The stock, in our view, has been severely oversold since its 2005 IPO, as the company did not achieve the announced goals. We believe that Alfa Group, which accumulated a blocking stake in Amtel at the end of 2006 and which is well-known for its ability to turn troubled companies around, will help Amtel realize maximum value from its strategy and improve financial situation,” the analysts conclude.

23rd May 2007/by Tyrepress Editors

Bush Directs EPA to Examine Regulating CO2

President Bush has ordered the US Environmental Protection Agency (EPA) to begin evaluating stricter emissions standards in response to the recent Supreme Court decision that determined CO2 to be a pollutant. By labelling CO2 a pollutant the Supreme Court opened it to regulation by the EPA, potentially circumventing the requirement for Congress to pass stricter Corporate Average Fuel Economy (CAFE) standards. The President indicated that he wants action prior to his departure from office in January 2009. The EPA will work with the Departments of Transportation and Agriculture in developing the standards which will have to consider factors such as vehicle safety and the cost of the mandates. Deutsche Bank analysts have reported that CO2 regulation will have a “materially positive intermediate-term impact” on some aftermarket companies.

15th May 2007/by Tyrepress Editors

Daimler Sells Chrysler for 5.5 billion euros

Daimler has sold 80.1 per cent of Chrysler to private equity firm Cerberus for 5.5 billion euros, far below the $36 billion price-tag the company originally paid. Daimler will retain a 19.9 per cent minority share and has committed to reinvesting 4.5 billion euros back into Chrysler, leaving Daimler with just 1 billion euros. Despite this market observers report that margins in all industrial activities (Mercedes trucks, vans and buses) are likely to rise sharply over the next few years.

Analysts at Deutsche Bank have calculated that Cerberus’ bid values Chrysler at -3.4 billion euros. They also have pointed out that the deal will have implications on GM and Ford and signal a harder line when it comes to any future labour negotiations:

15th May 2007/by Tyrepress Editors

Siemens Hires Banks for Possible VDO IPO

(Akron/Tire Review)) News reports out of Germany say that Siemens AG has hired Goldman Sachs Group Inc., Morgan Stanley and Deutsche Bank AG to act as lead coordinators for a possible initial public offering (IPO) of its VDO Automotive unit.

The reports added that Siemens has not yet made a final decision on whether or not it will seek to list a minority stake in the unit, or sell it outright.

Continental AG has repeatedly said it wants to buy the business from Siemens.

Following an IPO, analysts expect VDO to achieve a market capitalization of $9.5 billion to $12 billion. However, if the entire business is sold, they think Siemens could receive more than $14 billion for it.

11th May 2007/by Tyrepress Editors

Nokian Reports Record Car Tyre EBIT

Despite the fact that Nokian had already pre-announced its Q1 headline numbers, analysts have written of their surprise at the strength of the Finnish companies divisional breakdown figures. “Car Tyres reported EBIT of 41.6 euros, 13 per cent higher than we had assumed. The EBIT margin was hence 29.4 per cent, the second highest quarterly margin ever beaten only by the third quarter of 2004, which is a seasonally more important quarter,” Deutsche bank reported in an analytical report.

Growth in Nokian’s Russian operations are said to have been a main reason for the record margins. Nokian’s St Petersburg plant has been routinely praised by analysts who described it as generating significant cost efficiency improvements “on top of the very solid demand picture.”

11th May 2007/by Tyrepress Editors

Amtel Brand Named Russia Superbrand

(Akron/Tire Review) For the second straight year, Amtel-Vredestein NV’s Amtel tire brand has been tapped as “Superbrand 2007” in Russia.

The Amtel brand was selected based on a series of polls and surveys of consumers and business analysts concerning product quality, brand awareness and brand recognition.

Other Superbrand 2007 winners included BMW, Samsung, VTB 24 and MasterCard.

8th May 2007/by Tyrepress Editors

Michelin Announces Truck Tyre Price Increases

Michelin has announced a price increase of up to 4 per cent for its truck tyres in the US. The increase will take effect on 1 June. In addition from 1 July prices of agricultural tyres sold under the Michelin, BFGoodrich, Kleber and Taurus brands will rise by an average of 3 per cent in the US and Canada, the group said.

Referring to the truck tyre price increase, Deutsche Bank analysts said: “We believe that only a small portion will stick. However, this small portion will go directly to the bottom line since natural rubber price (primary used in truck tyres) is now more or less stable since the beginning of February. So far the reporting season of the industry has highlighted a very strong price/mix effect.”

4th May 2007/by Tyrepress Editors

Michelin Q1 Sales Praised

Analysts have praised Michelin’s strong first quarter sales which saw sales increase 9.5 per cent when restated from foreign exchange impact. The company also reported market share gains of 4.9 and 4.4 per cent in Europe and the US respectively. “…this gives us comfort in our first half EBIT of 900 million euros, 40 per cent (250 million euros), significantly above consensus,” Deutsche Bank analysts commented, reporting the consensus as 765 million or 120 million euros. Meanwhile Thomas Aney of Dresdner Kleinwort maintained his “hold” rating on Michelin, while raising his estimates for the company.

27th April 2007/by Tyrepress Editors

Analysts: Nokian 1Q EBIT 80 per cent Above Expectations

Financial analysts at Deustche Bank have commented that Nokian’s first quarter performance as clearly exceeded expectations. Nokian’s 200 million euros of net sales and 39 million euros of pre-tax profits were described as “16 per cent and 80 per cent better than expected, largely driven by strong demand in Russia for both summer and winter tyres. Furthermore the company’s mix of winter tyres was said to be “clearly better in first quarter than it was last year.”

26th April 2007/by Tyrepress Editors

Report: 85 UK Tyre Companies Are Takeover Targets

At least 85 UK tyres, exhausts & batteries firms are prime targets for a takeover and another 113 could be sold off by their parent companies, according to a new report by independent business analysts Plimsoll Publishing. At the other end of the scale are 27 major companies that are expanding rapidly, largely through acquisitions, and 76 “predators” who are using the misfortune of others to clean up in the market.

Plimsoll’s senior analyst, David Pattison, said: “The 85 takeover targets we have identified generally have a similar profile – they are privately owned, are in financial difficulty and have owners who are approaching retirement. Any firm in this position should be listening to the warning bells, because its potential selling price will be in the bargain basement. The other 113 distressed companies are operating as divisions of larger parents. I’m fairly certain that conversations are going on behind closed doors about their future.”

16th April 2007/by Tyrepress Editors

US Shipments Down, But Pricing ‘Robust’

Preliminary US tyre shipment data shows that the North American light vehicle replacement market declined 1.3 per cent year-on-year in first quarter of 2007. This figure is seen as an improvement over the -4.5 per cent drop during the same period of last year, but is not enough for analysts to feel comfortable talking about recovery. However, Deutsche Bank analysts have reported that “pricing appears to be trending significantly better than expected.” Referring to Goodyear’s 4-5 per cent price increase effective1 April, the analysts added: “We believe that Cooper is likely to follow suit. Every 1 percentage point change in price translates to approximately $0.25 in earnings per share for both companies.”

13th April 2007/by Tyrepress Editors

Analysts: Continental/Matador Deal “Logical”

Describing the deal as “logical” Deutsche Bank analysts have estimated that the cost of the 51 per cent Matador stake Continental AG recently purchased should be “in the low triple digit million euros.” This is consistent with earlier reports (published in Tyres & Accessories at the third quarter of 2006), which predicted the deal would cost around 150 million euros.

Summing up the benefits of the deal for Continental the analysts said: “Via Matador Continental gets a further plant in Russia, access to a 24 per cent stake in its combined venture for truck tyres as well as a small addition to Contitech (Matador also produces conveyor belts),” adding: “Since the tyre industry is global, the group should logically in the future make acquisitions outside Europe if they want to become a more global player in the industry.”

13th April 2007/by Tyrepress Editors

Euro Strength “Concerning”

The high relative value of the euro against the Japanese yen is causing concerns for those trading with Japan. According to an analysts report published today the euros is trading at an all-time high versus the yen and is only 2 cents away from an all-time high versus the dollar. Deutsche Bank analysts reported that the profitability of European exports to Japan “which are hardly profitable…even though Japanese pricing levels remain on the high side in a global context” are of particular concern.

11th April 2007/by Tyrepress Editors

Q4 Tough for Indian Tyremakers

Indian tyre manufacturers are expected to experience a difficult quarter in Q4 2007, the Business Standard has reported. According to the report “spot rubber prices in this quarter till date have averaged 95 rupees per kg levels as compared to an average price of 78.4 rupees per kg in same period last year.” Higher rubber prices this year are attributed to unfavourable weather conditions in key South East Asian producing countries, coupled with buoyant demand conditions from China, say analysts. As a result tyre stocks are said to have under-performed since the beginning of the quarter. Apollo Tyres is said to have 25 per cent during this period compared to a 7.6 per cent fall in the Sensex exchange. MRF also declined 24 per cent during this period.

29th March 2007/by Tyrepress Editors

Goodyear Engineering Was Sale “Bad News” for Contitech

Following the news that Goodyear Tire & Rubber Co has sold its engineering products division to Carlyle group, Deutsche Bank analysts have reported that the sale would have been a good purchase for Contitech. It has been widely reported that Continental was interested in both Goodyear Engineering products and Siemens VDO.

26th March 2007/by Tyrepress Editors