JSC Yaroslavsky Tire Works in Yaroslavl’, one of Russia’s largest tyre manufacturers and a part of Sibur holding, has released full-year 2004 and first quarter 2005 financials. The results show that, once again, although the company’s output dropped its profitability has actually increased. 2004 sales fell 30 per cent year-on-year to $95 million, while operating profit dropped 17 per cent to $2.5 million.
Executives at Michelin’s AGM have reiterated their target of achieving at least the same operating profit margin in 2005 as they did in 2004, despite lower volumes in the first half of this year. At the same time the company appointed Michel Rollier as new managing partner.
Finnish tyre manufacturer Nokian Tyres Oyj reported profits of 9.4 million euros, compared with 7.1 million euros last year. At the same time net sales rose 129.4 million euros from 112.9 million. Nokian Tyres said its main target for 2005 remains to outperform the results of the previous year in terms of net sales and profit.
Size and scale are no advantage when it comes to overall financial success, according to a new study by Tyre Manufacturers & Distributors industry analysts Plimsoll Publishing. It seems the industry’s smaller players are putting their larger counterparts to shame when it comes to overall financial performance.
The top 60 “major players” currently control almost 94 per cent of the market. Yet look beyond their size at their individual financial performance and their image appears somewhat staid, according to Plimsoll analysts.
(Akron/Tire Review) Goodyear Tire & Rubber Co continued posting positive results as its first quarter 2005, earning $68 million in profit against record first quarter sales of $4.8 billion.
The Akron Beacon Journal described the results as a “financial home run,” adding they greatly exceeded estimates from Wall Street analysts. The market watchers had thought Goodyear would earn 1 to 3 cents a share for the quarter ending 31 March. Analysts’ high estimate was 10 cents a share, with the lowest a loss of 2 cents. In fact the profits equated to 35 cents a share.
Releasing its first quarter 2005 results, Continental’s management reaffirmed the company’s desire to achieve ambitious targets. During the first quarter, consolidated sales rose by 8.9 per cent to 3,253.1 million euros, with newly acquired Phoenix contributing 237.7 million euros.
At the same time EBIT increased by 9.5 per cent to 281.7 million euros, according to the company. Phoenix is reported to have generated an operating result of 11.3 million euros. Consolidated earnings climbed to 167 million euros, representing a 24.8 per cent increase. Earnings per share rose to 1.15 euros.
JP Morgan analysts have changed Goodyear’s share rating from “neutral” to “overweight,” while raising their estimates for the company. The analysts mentioned that the company’s share price has depreciated by 22 per cent year-to-date, creating an attractive investment opportunity. According to the analysts Goodyear is likely to benefit from moderating raw material costs in the short term and a healthy pricing environment globally. JP Morgan raised earnings per share estimates for 2005 and 2006 from $0.65 to $0.80 and $0.75 to $0.90 respectively.
Deutsche Bank analysts have confirmed what industry insiders were already thinking, there is a shortage of earthmover tyres. However, this provides numerous opportunities for the right parties. Operating profit margins are high, reaching double digit levels. Despite this the sector is relatively small with annual sales worth $5.5 billion, or 7 per cent of the $80 billion world market. According to the analysts, the earthmover sector is dominated by the “big three.” Bridgestone is said to hold a 60 per cent market share, followed by Michelin with 30 per cent and Goodyear with 10 per cent.
Michelin has released fist quarter results that show the company’s net sales have “stabilised” in value terms. The weakening dollar is said to have contributed to the 0.2 per cent drop in sales to 3.61 billion euros against the same period last year.
(Akron/Tire Review) JP Morgan analysts have upped their estimates for Cooper Tire & Rubber Co and upgraded its rating to “neutral.” The analysts said Cooper is benefiting from improved tyre pricing in the US and that its first-quarter results were in line with estimates. However, the company’s share price has depreciated by 20 per cent year to date, the analysts noted. Cooper’s EPS estimates for 2005 and 2006 were increased from $0.33 to $0.37 and from $0.50 to $0.70, respectively.
A new study from industry analysts Plimsoll Publishing asks how important are the leaders of a company to its financial performance? It suggests that we will soon find out, as one in four of UK Tyre manufacturers and distributors company directors will be aged over 60 by the end of this year and, as they near the end of their careers, who will take over?
US replacement tyre shipments rose one per cent in March, Deutsche Bank analysts have reported. According to the report, this number is seen as relatively strong in the context of the seven per cent year on year increase experienced in February. The analysts predict a 2 – 3 per cent increase for the quarter.
Michelin is likely to embark on a major restructuring programme in the coming years. The news follows a meeting between Deutsche Bank analysts and Michelin. The fact that 24,000 people will be retired in the next five years (17,000 in Western Europe or 31 per cent of the workforce and 7,000 in North America or 33 per cent of the workforce) is said to allow for higher productivity gains and transfer of production to low cost countries.
Analysts have predicted that Michelin’s first half operating profit could match last year. They added that a three or four per cent fall in volume should be offset by the effects of a strong price/mix effect of plus four or five per cent. The Deutsche Bank report states that the analysts expect first half operating profits to be 50 million euros higher than the consensus of 700 million or 9.3 per cent of margin. This translates into an earnings per share estimate of 5.5 euros for 2005 earnings and 6.5 euros for 2006 earnings, against a consensus of five and six euros respectively.
Goodyear is “more or less on track…to come in around breakeven” during the first quarter of 2005, Deutsche Bank analysts have reported. The analysts went on to say that they foresee a modest profit ($0.05 per share) in the second quarter, while maintaining their $10 target sell rating. The market watchers suggest that Goodyear’s new $3.2 billion credit facility ($2 billion of which has already been used) has “bought the company enough time to turn its tyre business around. However, there was caution. The analysts warned that competition from America and Eastern Europe present challenges for the company, as do declining military revenues and lower auto production levels. In addition, competitors appear to be outpacing Goodyear’s efforts to shift to low cost markets, they concluded.
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