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Analysts: Conti Doing Extremely Well in Tyre Operations

Continental AG’s tyre operations are “doing extremely well,” according to financial analysts. Writing in an investor’s note, Deutsche Bank analysts reported that the tyre business' 11 per cent (combined truck and passenger) operating margin in the first half of 2009 outperformed its rivals.

“Even if the group enjoyed a small 45 million euro positive impact from raw material (compared with a small negative of 19 million euros at Pirelli and a bigger negative of 117 million euros at Michelin), they enjoyed a double digit operating profit margin despite a high 20 per cent volume decline,” the analysts wrote.

Looking forward, Deutsche Bank predicted that the tyre operations will benefit from a positive raw material effect of (200 million euros) and from a volume recovery.

The analysts pointed out that tyre operations produce 48 per cent of Continental AG’s group revenues.

21st September 2009/by Tyrepress Editors

Pirelli Tyre Due 100 million Raw Material Effect, Say Analysts

Pirelli Tire achieved a high 7.7 per cent operating profit margin in first half 2009. The figures come despite a negative raw material impact (-19 million euros) and despite a 16 per cent drop of volumes and a low capacity utilisation rate of 75 per cent.

Pirelli Tyre CEO, Dr Francesco Gori made the remarks at a presentation given during the Frankfurt motor show. And the good news left analysts predicting the company’s financials should improve significantly in the coming quarters due to an estimated 100 million euros positive raw material effect; a recovery of volumes with capacity utilisation reaching 90-95 per cent; and “the full payback of restructuring measures.”

Reporting on the presentations, Deutsche Bank analysts observed that Pirelli’s tyre business should benefit from the Brazilian government’s recent decision to impose import tariffs Chinese made tyres. The tariffs of US$0.75/kg are seen a significant plus for the company, in a market where the group already enjoys 30 per cent market share and “above average operating profit margin.”

Chinese imports are said to represent approximately 10 per cent of the Brazilian market.

21st September 2009/by Tyrepress Editors

Continental Hires Credit Suisse for Capital Raising

Continental AG, Hanover, has hired Credit Suisse to act as an independent consultant for “the upcoming financing topics within the corporation.” The move is widely seen as preparation for a refinancing project that could be worth as much as 1.5 billion euros. According to a statement reporting the news, the key task of the advisor is to evaluate options for future sustainable financing and capital structures as well as to enable an optimal refinancing of the company.

“For the upcoming tasks and meetings regarding various interrelated financing topics, we wanted to ensure that we also have the support of an independent consultant without prior or existing connections to any of the stakeholders of Continental,” said Continental CEO Dr. Elmar Degenhart on 17 September. “Our goal is to create a sound financial structure that continues to give us the flexibility to fully realize our strategic goals.”

18th September 2009/by Tyrepress Editors

Tyre Tariff May Slow Recovery: WTO

Tire Review/Reuters – Trade measures of the type imposed by the United States on Chinese tires run the risk of spilling over and slowing economic recovery, a senior World Trade Organization (WTO) official said on Thursday. The tyre trade dispute blew up between the United States and China after Washington imposed additional duties on Chinese-made tyres last Friday, accusing Beijing of flooding the US market.

18th September 2009/by Tyrepress Editors

30 Kwik-Fit Managers Investigated Over Bonus Irregularities

Managers of around 30 Kwik-Fit depots have been suspended and are being investigated over claims they manipulated figures in order increase their bonuses. According to a report in The Sun, most of the 30 depots affected are in Scotland, however a Kwik-Fit spokesperson told Tyres & Accessories/tyrepress.com that the inquiry covers branches across the UK.

Kwik-Fit's press representatives sought to downplay the newspaper reports, pointing out that while staff have been suspended there is not yet any evidence of wrongdoing. Managers are no-doubt seeking to avoid the kind of attention attracted by The Sun's news story which ran under a headline mocking the company's famous tag-line – “You can’t nick quicker than a Kwik-Fit fiddler.”

16th September 2009/by Tyrepress Editors

Analysts Praise Delticom's Performance

Financial analysts have given Delticom AG a “Buy” rating and a set 24 euro target price, above the company’s current level of around 20 euros. The Deutsche Bank analysts described Delticom as “a very attractive business model in the fragmented tyre replacement market” and were clearly impressed with their performance to date. “In 2009, one of the worst years ever in the tyre industry, Delticom targets 10 per cent revenue growth and increased its EBIT-margin outlook from 6 to 7 per cent. We think Delticom's eCommerce focus will lead to further market share gains and allows for annual revenue growth of 13.4 per cent and earnings per share growth of 18.4 per cent (estimated company annual growth rate from 2008-2011).”

14th September 2009/by Tyrepress Editors

Reports: Hankook to Build Indian or Malaysian Factory

Hankook executives are reportedly planning to build a new tyre production facility in either India or Malaysia. The news follows the announcement that Hankook is investing 230 million euros in increasing output at its Dunaujvaros, Hungary factory to 10 million tyres a year. Speaking to the Financial Times, Hankook executive Calvin Pak explained that the company’s next phase of expansion would be in south Asia “for example in India or Malaysia.” There was even talk of a North American plant “in the longer term.” Calvin Pak reportedly explained that Hankook’s competitive advantage over European manufacturers was that it had won quality accolades but remained “more affordable thanks to less of a brand premium.”

11th September 2009/by Tyrepress Editors

Klarius "Dragons'" Recruitment "Den" Offers Trials to Graduates

One of Europe’s largest automotive aftermarket manufacturers, Klarius has held a recruitment day inspired by the BBC television series, ‘Dragon’s Den’, in which promising graduates are given the opportunity to “pitch” themselves directly to the company’s board of directors. The day offered a variety of UK and European trial positions – which could potentially become permanent – for the successful candidates.

9th September 2009/by Tyrepress Editors

Kumho May Sell Vietnam Plant

Kumho is in negotiations with Bridgestone to sell its recently finished tyre manufacturing plant in Vietnam, according to a report issued by Jaccar, a global investment firm. Kumho invested $155 million in the plant, which was completed in 2008 and has an annual production capacity of 3.15 million tyres. The tyre-maker has said it planned to export tyres manufactured in the Vietnam plant to southeast Asia, Europe and the US. Jaccar reported Kumho is negotiating the plant’s sale due to liquidity crunches resulting from the current “global financial turmoil.” (Tire Review)

3rd September 2009/by Tyrepress Editors

Transense Signs MOU With Mesnac

International News, News

Transense has signed a Memorandum of Understanding (MOU) with Qingdao Mesnac Co. Ltd, the parent company of the Sailun brand’s tyre manufacturing division. According to an official statement, Transense and Mesnac have entered into an agreement to combine their individual areas of expertise, for the purpose of developing Transense's patented tyre pressure monitoring sensor technology for the attachment or embedding of these sensors into tyres. Under the terms of the agreement Mesnac have agreed to an initial upfront payment and will pay additional sums for technology transfer/engineering support on an as required basis. Transense shares rose 17 per cent following the news.

3rd September 2009/by Tyrepress Editors

UK Withstanding Truck Tyre/Retreading Downturn Well

Following a decade of steady growth in demand averaging 10 per cent, last October the financial and economic crisis pushed European retreading markets into a freefall. The largest decline was listed by market participants in the opening quarter of this year, and according to Marangoni demand for retreaded tyres in Europe reduced by a quarter. Yet at the same time, the market for new truck tyres dropped some 30 per cent. In the second quarter, demand was still some 15 per cent below that of the previous year, while the new tyre industry recorded sales a clear 25 per cent worse – another result reflecting the new tyre industry’s greater difficulties.

3rd September 2009/by Tyrepress Editors

Alcoa Introduces New Web Comparison Tool

Alcoa’s Wheel and Transportation Products business has introduced the "CalcuLighter". Found at http://www.alcoa.com/calculighter, the CalcuLighter is an on-line tool for truck fleet and owner-operators that is designed to provide exact financial data comparing steel and aluminium wheel alternatives. Designed primarily for US based users, site visitors can quickly compare steel duals versus aluminium duals or wide base wheels, or aluminium duals compared to wide base, simply by entering a few specifics regarding their own operational needs.

28th August 2009/by Tyrepress Editors

US Tariffs – Compatible with WTO Rules?

International News

As Reuters notes, the decision as to whether or not the US will impose tariffs on Chinese made consumer tyres is not a straightforward one. As the news service pointed out on August 26, Chinese trade sources indicate that these tariffs may not line up with a safeguard mechanism China agreed to when it joined the World Trade Organisation.

26th August 2009/by Tyrepress Editors

Feeling Deflated? It’s Time to ‘Go Nitro’, says Kwik-Fit

The one pound per tyre cost attached to Kwik-Fit’s newly launched nitrogen tyre inflation service could reduce, according DFT figures, the nation’s fuel bill by £1.2 billion a year. You can thank the size and dryness of nitrogen molecules for this at the pump frugality – these two qualities make them less prone to leaking or evaporating from a tyre, and therefore correct tyre pressure can be maintained for much longer.

25th August 2009/by Tyrepress Editors

Schaeffler Debt Deal – Paving the Way for a Merger

The Schaeffler Group has moved one step closer towards a merger with Continental AG after reaching an agreement with banks to refinance 12 billion euros in debt. According to a Schaeffler statement, the ball bearing manufacturer’s credit lines have been split into two portions of 4 1/2-year and six-year maturities and will be implemented in several stages. Refinancing deals were arranged with UBS, Royal Bank of Scotland, Unicredit SpA’s HVB Group unit, Commerzbank AG and Landesbank Baden-Wuerttemberg.

19th August 2009/by Tyrepress Editors