Following the news that Continental AG shares will once again be traded on the German DAX list, financial analysts have been assessing the impact that this likely to make on the company’s share price. For its part Morgan Stanley estimated that the impact will actually be “relatively small from a trading perspective – circa 1-2 days of trading volume and circa 1-2 per cent of the current available freefloat.”
Almost four years after being shown the door at the DAX 30, Germany’s Continental AG is set to re-enter the exclusive group of the 30 major German companies trading on the Frankfurt Stock Exchange. Stock exchange operator Deutsche Börse announced Conti’s return to the DAX 30 on the evening of 5 September.
Analysts at DB Equity Research opine that the European tyre label will not lead to any material change of market share amongst tyre makers in the coming years. In its 27 August morning news, the Deutsche Bank team explained the workings of the label and added that they consider its introduction a move “in the right direction.” However, the analysts believe the regulation should favour premium tyre companies with a multi-brand strategy, and they noted that "some companies will be tempted to cheat to improve their results.” DB Equity Research also expects that from a range of, say, 500 tyres, every tyre company will succeed in having “at least a few AA rated tyres they will advertise.”
With Bridgestone having announced that first half operating profits grew 43 per cent year-on-year to 133.8 billion yen, the tyre manufacturer has upped its full-year operating profit guidance. Bridgestone had predicted that it would achieve 118 billion yen by this measure, with Deutsche Bank estimating nearer 136 billion yen. As a result the financial analysts now report that the company has lifted its full-year operating profit projections and is now looking at 50 per cent year-on-year growth to 287 billion yen (previous predictions were 269 billion yen, with Deutsche Bank expecting 316 billion yen).
Continental AG may have delivered 948 million euros of adjusted pre-tax profits (EBIT) in the second quarter of 2012, compared with consensus expectations of 865 million euros, but the biggest surprise for analysts was said to have been the group margin figure. At 11.5 per cent this was nearly a percentage point (and therefore on the way to 10 per cent) higher than 10.6 per cent that was expected.
Michelin’s EBIT result of 1.3 billion euros beat market expectations by a huge 14 per cent, according to financial analysts. At the same time the company also announced a virtually unprecedented margin of 27 per cent in its Specialty Tyre division.
Pirelli’s financials means that the Italian tyre manufacturer outperformed market expectations of its second quarter EBIT performance by 5 per cent, according to financial analysts. The firm also maintained its full-year financial guidance, Morgan Stanley wrote in an investors note reflecting on the figures:
Pirelli reports that the company closed the first half of 2012 with revenues of 3,021.8 million euros, an increase of 8.3 per cent compared with the 2,789.3 million euros published for the same period in 2011.
While seeking to allay fears that Pirelli will miss its targets when the Italian-based tyre manufacturer releases its second quarter figures on Thursday, financial analysts have suggested that Pirelli shares are overweight and that a price correction is “overdue.”
The latest RMA produced US tyre market shipment figures do not suggest any kind of immediate recovery is on the horizon. According to financial analysts who trawled through the figures, despite the fact that the comparison period wasn’t particularly strong, the market was down 1.5 per cent year-on-year in June. Commercial vehicle tyre shipments saw an even sharper decline (-11 per cent) but this was also described as a tougher comparison.
Delticom issue a profit warning (19 July 2012) after revenues and pre-tax profits (EBIT) came in below expectations. As a result the company reduced its full-year growth target from +10 per cent to +5 per cent year-on-year and stated that an EBIT margin above 9 per cent (compared with 6.9 per cent in the first half of 2012 and 9.4 per cent in the first half of 2011) is only attainable in the event of a good winter tyre season prompted by wintery weather.
Market research firm GfK Asia has released a report on the performance of four emerging Southeast Asian tyre markets in the first quarter of 2012; the company found that demand for replacement tyres in the countries investigated – Indonesia, Malaysia, Philippines and Thailand – increased 14 per cent between January and March in comparison with the October to December 2011 quarter. According to GfK’s retail tracking of replacement passenger car tyres across a number of cities within the four countries, some 2,557,600 tyres were replaced in the first three months of the year.
After years of relative quiet regarding speculation about ownership of Continental AG, a relatively weak first quarter at the company’s majority shareholder (Schaeffler) has kick started the rumour mill. The thinking is that the shareholder will off-load some of its share to free up cash flow and support the valuation of Conti as it re-enters the Frankfurt-based DAX German stock exchange.
Nokian’s recently reported first quarter 2012 financial numbers were 9 per cent ahead of consensus when it came to pre-tax profits (EBIT). In addition the Finnish firm’s revenue result during the same period was 5 per cent higher that average of market analysts expectations. According to analysts at Morgan Stanley, Nokian’s margin was also 100 basis points better than expected at 27.3 per cent. In fact the only cloud on the horizon was said to be net debt which was weaker than estimates perhaps because of high working capital.
While financial analysts described the results as “a big beat”, on the day the news was announced Pirelli’s share price fell 10 per cent. Pirelli pre-tax profitability was said to have been better than consensus of analysts’ estimates, mostly due to better price/mix and cost control. Market watchers also welcomed the fact that margins are at record levels.
If you would like the latest news from the Chinese tyre industry in Chinese, visit our partner site TyrepressChina.com. Or click below to continue on Tyrepress.
