On the back of an expanding original equipment portfolio and higher ultra-high performance tyre sales Hankook Tire has reported increased operating profits and sales in its third quarter, reversing a year-long downward trend. The manufacturer has global sales revenues of 1,250 million euros (KRW 1.72 trillion), with operating profit of 208 million euros (KRW 276 billion).
While many of the quarterly results released at the moment make for depressing reading, those published by Goodyear Tire & Rubber yesterday show that the US-based tyre maker is making even better than expected progress on the path back to financial strength. An obviously pleased Richard Kramer reported on 29 October that Goodyear “delivered outstanding earnings growth in the quarter and achieved a segment operating income margin of more than 11 per cent, the highest in more than a decade, despite an increasingly challenged global economy. The chairman and chief executive officer added that “these results reflect our focus on capturing the value of our branded products in the marketplace and continued progress generating cost savings through our operational excellence activities.”
Titan International released its third quarter 2014 results yesterday, and in the words of chief executive officer and chairman Maurice Taylor, there were a lot of negatives to see. This is bad news for management, bad news for shareholders and, for many Titan employees, very bad news.
Sweden’s Trelleborg AB has reported a 5.8 per cent increase in net sales in the third quarter of 2013, with acquired business contributing some two per cent towards this result. Company president and CEO Peter Nilsson commented that Trelleborg “achieved these healthy earnings despite weaker market trends for several market segments and thus a slight fall-off in organic growth.”
In response to slowing emerging markets (excepting China) as well as economic and geopolitical uncertainties, Michelin has lowered its full-year volume growth outlook from three per cent to between one and two per cent. The French tyre maker says the market slowdown observed since the second quarter of this year continued into the third. In addition to contracting original equipment demand from emerging markets apart from China, demand also weakened in Europe, particularly for truck tyres. Overall sales volumes rose by one per cent during the third quarter, with price-mix effect a negative two per cent.
Kwik-Fit GB has reported operating profits of £22.922 million – almost double the 2013 figure of £11.918 million – despite annual sales remaining relatively flat (the company posted just a 1 per cent increase over 2013).
For the first time in its 15 year history, online retailer Delticom has reported negative net earnings. The German firm says it ended the first half of the 2014 financial year with a net loss of approximately €200,000; it says this minus result is primarily attributable to an accumulated, after tax loss of €8.0 million from Tirendo, the Berlin-based online tyre retailer Delticom acquired in September 2013. The perhaps understated comment from Delticom on 14 August was that “Tirendo’s performance in the first half of the year is significantly below planning, both in terms of revenues and earnings.”
Yokohama Rubber Co., Ltd. reports that its net sales, operating income and net income reached record first-half highs in the first half of the 2014 financial year. Net income climbed 38.4 per cent over the same period of the previous year to 18.0 billion yen (£104.9 million), on a 23.8 per cent increase in operating income to 23.6 billion yen (£137.6 million), and a 5.3 per cent increase in net sales to 283.9 billion yen (£1.7 billion). Underlying this performance was a strong sales growth in the company’s tyre business, both in Japan and internationally, along with gains in a number of other business areas. Earnings in each segment benefited additionally from a downward trend in raw material prices and from the weakening of the yen.
Few tyre makers depend as heavily on the Russian market as Nokian Tyres, and the Ukraine crisis therefore lefts its mark on the company in the first half of this current financial year. Kim Gran, president and chief operating officer of Nokian Tyres, said the Russia and CIS markets “proved to be more challenging than estimated” in the January to June 2014 period due to the crisis’ escalation, and a “clear drop in sales value” occurred as a consequence. Both unit volumes and sales in the region declined; Nokian’s sales in Russia dropped 31.4 per cent year-on-year between 1 January and 30 June to €230.9 million while sales in the CIS countries plummeted 66.0 per cent to €6.9 million. Combined, the region experienced a 33.3 per cent decrease in sales, to €237.8 million. Most of this decrease in sales value resulted from the weakening of the Russian rouble.
Robust growth was once again order of the day at Sumitomo Rubber Industries (SRI). The company reports that in the first half of 2014 its turnover has increased to 379 trillion yen (£2.2 billion). This growth almost exclusively came through the company’s tyre business; SRI is the second largest Japanese tyre maker and its active worldwide with the Dunlop (outside of Europe and North America) and Falken brands.
After a first quarter punctuated by lower year-on-year net sales and income, Cooper Tire & Rubber achieved growth – albeit slight – in the second quarter. During the three-month period ending 30 June, the tyre maker’s year-on-year net sales increased 0.5 per cent to US$888.7 million. Operating profit rose 10.7 per cent to $76.6 million, with operating margin reaching 8.6 per cent (7.6 per cent in Q2, 2013). Cooper says the increased in operating profit resulted primarily from favourable raw material costs of $67 million, higher unit volume of $13 million, favorable selling, general and administrative costs of $10 million, and manufacturing cost efficiencies of $7 million, which more than offset unfavorable pricing and mix of $85 million. The 2013 operating profit included $7 million in costs related to the then-pending merger with Apollo Tyres, which subsequently did not occur.
In the second quarter of 2014, Bridgestone managed to increase its turnover, and its operating profit even more so. And the figures for Europe were particularly noteworthy and show a continued improvement, even if they remain below company average.
In the first half of the year Pirelli was unable to maintain its year-on-year turnover, however it increased its profitability significantly and profited from the premium segment’s growing significance to the Italian tyre maker; the premium segment now accounts for more than 56 per cent of total turnover, as opposed to 50.5 per cent last year. And while total volumes increased by 1.8 per cent in the period between 1 January and 30 June, premium volumes shot up 21.6 per cent.
Although volumes at Lanxess increased two per cent year-on-year in the second quarter of 2014, this could not fully offset the five per cent decline in selling prices it experienced. Therefore, the company’s overall sales fell 5.7 per cent year-on-year to €2.02 billion. “The continuing low earnings level and increasing competition show the need for further action to improve competitiveness,” said Board of Management chairman Zachert.
On 6 August the Board of Directors at Apollo Tyres Ltd approved the company’s unaudited results for the first quarter of its 2014-15 financial year. For the three-month period ending 30 June 2014, Apollo Tyres Ltd, on a consolidated level, reported net sales of Rs 32.35 billion (£314.29 million), 1.4 per cent higher than a year earlier. Operating profit rose 13.4 per cent to Rs 4.58 billion (£44.50 million) and net profit was up 37.3 per cent to Rs 2.28 billion (£22.15 million).
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