Now one of the largest tyre-producing countries in the world, China has an indisputable influence on the direction of global tyre trade. The home of both fast-growing up-and-coming brands as well as a burgeoning domestic market, this tag chronicles China’s involvement with the tyre business.
The Yokohama Rubber Co., Ltd., reported record first half sales for the first six months of 2013. According to the company, net sales edged up 0.3 per cent over the same period of the previous year, to 269.7 billion yen. However, while sales were high, profitability took a hit. Operating income declined 4.2 per cent, to 19.1 billion yen, and net income was down 5.3 per cent, to 13.0 billion yen. The tyre division appears to have borne the brunt of this.
Apollo Tyres Ltd has reported first quarter 2013-2014 financials including a 19 per cent rise in net profits to 1.66 billion rupees (22.8 million euros; US$29.7 million). The announcement followed the approval of a large dividend pay-out of 50 per cent per share (0.50 per equity share), for the year ended 31 March 2013.
Cooper Tire & Rubber’s second quarter 2013 results – most likely the last it will post before its incorporation into Apollo Tyres – showed a year-on-year drop in net sales, operating profit and net income. Net sales amounted to US$884 million, a decrease of $174 million compared with the same period a year ago, and operating profit for the second quarter was $69 million, $26 million lower year-on-year and 7.8 per cent of net sales. Net income was $35 million, or $0.55 per share, down from $52 million, or $0.82 per share, for the same period last year.
Nexen Tire’s second quarter results failed to live up to average analyst expectations. Although unit sales rose 17 per cent year-on-year, a ten per cent drop in average selling price compared with the second quarter of 2012 meant net sales revenue only increased 3.7 per cent to KRW 451.1 billion (£262.0 million) – 12.1 per cent lower than the consensus estimate of KRW 463.21 billion. Gross profit rose 4.6 per cent to KRW 125.1 billion (£72.7 million) and gross profit margin increased 0.2 per cent to 27.7 per cent.
Shareholder response to Apollo Tyres’ acquisition of Cooper Tire & Rubber has been mixed and several institutional investors petitioned the tyre maker in July to reconsider its decision. Apollo’s share price currently hovers around Rs 61, about two thirds the going rate before the company announced the planned purchase. Against this backdrop, company chairman Onkar S Kanwar’s address to shareholders at the Apollo Tyres 2013 annual general meeting framed the US$2.5 billion transaction as a necessary response to changing market conditions.
The strike at the Cooper Chengshan plant in China’s Shandong Province has now been underway for more than two weeks, and although Cooper Tire and Apollo Tyres state this industrial action will have no effect on the planned takeover, union officials at the plant are equally adamant it shouldn’t take place.
Although it retains a positive view of long-term developments, Germany’s Lanxess AG has admitted its current performance falls short of the company’s own expectations. Board of Management chairman Axel Heitmann spoke frankly upon the release of the specialty chemicals firm’s second quarter 2013 results – figures that include a 95 per cent year-on-year drop in net income.
Following on from its acquisition of Cooper Tire & Rubber, Apollo Tyres intends to focus investment where it anticipates growth – and vice-chairman and managing director Neeraj Kanwar has identified one such area as Eastern Europe.
Last year, Trelleborg’s Xingtai agricultural tyre plant in China’s Hebei Province entered service, making the Swedish firm the first global company to establish an agricultural tyre production presence in China. Plant output is expected to reach 150,000 radial and cross-ply units this year, with much of the production sold in the local market. To support its activities in China, Trelleborg Wheel Systems has now launched a new Chinese language website.
Leading European performance brakes brand Brembo is continuing to diversify its global strategy in a bid to tackle sales figures that continue to fall in much of its traditionally strong markets. In the first quarter of 2013, the German and, to a lesser extent based on the relatively good performance of its automotive manufacturing, UK markets were the only two to increase sales, while domestic Italian and southern Europe continued to look weak. However, growing sales in the USA and China are prompting global investment, such as the 115 million euro investment the manufacturer recently announced to expand its US and Brazilian operations. And the company has continued to indulge its penchant for spectacle, with involvement in top-level motorsport series, such as MotoGP and Formula One, and Hollywood blockbusters driving its continued premium brand marketing.
China’s Shandong Yongtai Chemical Group, manufacturer of the Durun tyre brand and the DMack tyres used in the World Rally Championship, and UK tyre wholesaler Treadsetters have jointly acquired automotive supplier Covpress. The two companies are believed to have paid £30 million to buy the Coventry-based firm, which employs around 450 people and manufactures body panels for vehicle manufacturers such as Jaguar Land Rover, Nissan and Renault. Chinese and UK media sources report Shandong Yongtai will hold a 70 per cent stake in Covpress and TIA Group company Treadsetters the remaining 30 per cent.
Brazil’s Chamber of Commerce (Camex) has reviewed and extended its anti-dumping duties on passenger car tyres manufactured in China. In late July it published a list of duties to be charged on tyres covered by Mercosul Common Nomenclature (NCM) 4011.10.00, specifically new 65 and 70 series, 13 and 14-inch rim diameter passenger car radials.
Hankook’s results for the second quarter (April-June) of 2013 continue to show steady growth with operating profit up 11.3 per cent and sales up 1.4 per cent year on year. The company achieved a global sales revenue of KRW 1.87 trillion (1.276 billion euro) in the quarter, with operating profit marked at KRW 271.3 billion (185.2 million euro). The company stated that increased sales in the ultra-high performance tyre sector and premium brand equity helped it secure solid sales increases in its major markets.
Upon announcing first half 2013 results, Michelin voiced its expectation that mature markets will continue their recovery from last year’s weakness in the remainder of the year, while expansion should be seen in emerging markets. Should this trend play out, the French manufacturer sees itself in good stead to achieve its projected full-year volumes. This is all well and good, however Michelin’s reportage of its latest results said little about the first-half bottom line, which is markedly down on the same time last year.
Visitors to Double Coin’s American web presence are invited to say ¡Hola! to a new Spanish language site. The tyre maker and the China Manufacturers Alliance have introduced the option in recognition of demand for information in Spanish from within both North and Central America. To further emphasise the site’s status as a source of information for the region, the existing www.DoubleCoin-us.com domain is being phased out and replaced by a new address, www.DoubleCoinTires.com. Visitors using the old address will be automatically redirected to the site, and Spanish speaking visitors can access the page in their language directly at www.Espanol.DoubleCoinTires.com.
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