Nokian Tyres has released its 1Q figures, which show a 17.8 per cent increase in sales over 1Q 03, from 95.7 million Euros to 112.7 million Euros. Group operating profit was up to 10.7 million Euros (3.2 million). Profit before taxes was 9.6 million Euros (1.6 million) and net profit totalled 6.5 million Euros (0.7 million). Sales of passenger car, heavy tyres and retreading materials rose, but bicycle tyre sales fell.
Polyurethane car tyres, made by the Amerityre Corporation, have passed US Federal Motor Vehicle Safety Standard No. 109, which specify tyre dimensions, load ratings and laboratory test requirements for bead unseating resistance, strength, endurance and high speed performance. Passing the test is the first step towards a tyre being able to be offered for sale in the USA.
Michelin is to raise its stake in Apollo Tyres from 14.9 per cent to 26 per cent over the next 15 months. The investment will happen when Apollo expands its passenger car radial manufacturing capacity. The two companies in the joint venture have also finalised their branding policy – while truck and bus tyres will carry both brand names, individual brands will be used for passenger car tyres. Michelin car radials will be positioned at a premium over Apollo-branded tyres to avoid any cannibalisation.
Continental AG plans to invest more than 250 million euro in building a new tyre production facility in Camacari (Bahia/Brazil) and expanding capacity in Malaysia with joint venture partner Sime Darby (car tyres in Alor Setar, truck tyres in Kuala Lumpur).
Michelin has released its 2003 year-end figures. These show net sales of 15.4 billion euro (down 1.8 per cent on 2002), although sales volume (in tons) rose by 3.7 per cent. Operating income was down 6.7 per cent, to 1.143 billion euro and net income was down 47 per cent, to 329 million euro. The main impact on the figures came from sharply-increasing raw material costs, which rose by 21 per cent (in US$) during the year. Currency fluctuations and several one-off extraordinary items also had a negative effect on the figures. Michelin believes that, in the light of these exceptional cost increases, its 2003 figures show that the company is resilient, with increased investment and a strengthened global presence. The company claims a worldwide tyre market share of 19.2 per cent.
Demand for car tyres in China has grown by about one million units a year for the past four years, fuelled by growing vehicle production, which last year exceeded four million units. Demand for light truck tyres is even higher, at an estimated 25 million annually.
The Nokian Group’s net sales and operating profit increased in Q4 with all profit centres improving their results. Net sales grew by 10.3 per cent, to 528.7 million Euro (2002: 479.2 million Euro). Operating profit was 79.1 million Euro ( 60.1 million Euro). EPS were up to 4.48 Euro ( 3.17 Euro). The Board of Directors propose a dividend equalling 35 per cent of the net profit, that is 1.56 Euro ( 1.11 Euro) per share, to be distributed.
Amerityre Corporation has been submitting prototype polyurethane car tyres to an independent lab for testing to determine if the tyres comply with Federal Motor Vehicle Safety Standard No. 109, applicable to new pneumatic tires.
The Goodyear management confirmed that it will cut another 1,200 jobs, beginning this year and finishing next. Goodyear has already cut 3,700 jobs this year and the bad news looks likely to continue next year. The management did not specify which jobs will be lost, nor which countries will be affected. The job cuts, along with cuts to employee pensions and benefits, are expected to save the company $350 million next year, Chief Executive Officer Robert J. Keegan said. Goodyear also announced that it also will raise prices 2 to 3 per cent on car tyres, 5 to 6 per cent on commercial tyres from the beginning of December.
J.K. Tyre, which so far had been focussing on car tyres, is banking on truck and bus radial tyres to propel growth. The JK Group is India’s leading manufacturer of four wheeler tyres. But now it wants to create a market for radial tyres for trucks and buses. Radials are 25 per cent more expensive, but offer 10 per cent higher fuel efficiency and last longer than normal bias tyres. JK is offering fleet operators a money back guarantee. A. K. Bajoria, president of J. K. Tyre said, “There’s a huge opportunity. The sky is the limit. People have to be educated about the fuel efficiency and durability of radials.”
The total number of car tyres sold in Poland in the first nine months was a record 5.4 million, or eight per cent higher than the same period last year. Sales of tyres H-rated and above grew by 21 per cent, and off-road vehicle tyre sales were up 54 per cent. The biggest sector – budget tyres – saw sales rise two per cent and winter tyre sales were up 13 per cent. Analysts expect the figures to have positive effects on the share prices of the two tyre companies on the Warsaw Stock Exchange; Stomil Olsztyn and Debica, which has a market share of over 50 per cent. Also, as exports account for the majority of their turnover, the two companies will benefit further from the strong Euro.
Jarro F. Kaplan, a Goodyear employee since 1986, is already in his second year as President Eastern Europe and is responsible for the region that includes Eastern Europe, South Africa, and the Middle East as well as some other countries in Asia. Before that he was General Manager Deutsche Goodyear in Cologne for two years and earlier in his career he held General Manager positions in the UK and Turkey. The region he is now responsible for is – measured by turnover – relatively small, but is becoming increasingly important due to the fact that the group is running highly competitive factories in Poland, Slovenia and Turkey. The income of the workers in those countries is not comparable with that of countries in Western Europe and will not become so for the next decade.
The biggest factory within the production network of the Goodyear Group in the whole of Europe is the Polish factory in Debica. The production is focused on passenger car tyres, mostly S/T rated. The Debica brand dominates, but many Fulda tyres are also produced there. And the Goodyear brand? “Not yet” says Kaplan. Debica has a production capacity of 40,000 tyres a day and there are already concrete plans drawn up to expand this. Plus it should not be forgotten that the Debica factory also produces some agricultural tyres as well as commercial tyres.
South Africa also belongs to Kaplan’s “Empire”. Goodyear has a big factory there and also its own equity with about 150 outlets, plus it is building and expanding a franchise-system.
Starting from South Africa, Goodyear is interested in doing more business in countries like Botswana, Sierra Leone, Kenya and some other countries. The company’s own equity in South Africa is doing a good job delivering tyres in the shortest possible time to customers. But it is absolutely clear that in the long run Goodyear must have its own people in those countries on which the company can rely; it can no longer leave everything in the hands of distributors. Kaplan: “You need to have your own people on the ground.”
Kaplan is travelling much more. For example to Dubai; from here Goodyear is defending its interests in countries like Israel as well as Palestine, in Iraq, Iran and so on. He travels to the north of Africa as well as to Pakistan. Pakistan belongs to his region. He who knows world politics can imagine that it might be impossible to bring India and Pakistan together under the one umbrella of Goodyear Asia.
To summarise: The Eastern Region is active in 95 different countries, with 52 different languages, which forces all managers to be sensitive and to respect the varied cultures.
In California, car tyres fitted as OE have to conform to federal fuel economy standards. However, the state argues that this should also apply to replacement tyres and has passed a law requiring the California Energy Commission (CEC) to develop efficiency standards, measured by rolling resistance. These standards will be in place by July 2007 and take effect a year later. Individual tyres will not have to be labelled, but retail stores will have to display efficiency lists.
Goodyear Dunlop Tyres UK Limited has announced that it has initiated an information and consultation process with Union Representatives regarding possible redundancies as a result of the removal of car and radial light truck tyre production at its Plant in Wolverhampton, West Midlands. The company has advised the UK Department of Trade and Industry and our Unions today that we will be ceasing production of car and radial light truck tyres in Wolverhampton and that up to 420 associates could potentially be affected. The remaining production from Wolverhampton is unaffected by this decision, with tractor tyre manufacturing and other processes used in tyre production, such as mixing, calendering and retreading, continuing on the site.
The NTDA is to work with its European partners and FARCO in Holland to press for a review of the Tread Depth laws. It is seeking a new legal minimum for car tyres of 2 mm for S,T and H, and 3mm for higher speed rated tyres.There will also be campaigning for an increase in the minimum legal limit on commercial vehicle tyres.
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