Sales wise, last year was a good one for Shandong Linglong. The Chinese manufacturer of car, truck agricultural and OTR tyres reported for the first time ever sales in excess of RMB 10 billion. The company’s 2008 sales, which reached a total of RMB 10.2 billion, (£1.03 billion) in the words of general manager Mr. Feng Wang, “not only exceeded our expectations but also hit a new historical high.”
Schaeffler Group and Continental AG walked away empty handed from financial support talks with federal ministers. They also received this advice: a “viable and forward-looking” plan, agreed on with creditors, is “a prerequisite for further negotiations.” According to an earlier Reuters report, Schaeffler Group had “sounded out” the German government about the possibility of 4 billion euros ($5.23 billion) in capital. The Federal talks came after talks with German states, including Bavaria, Lower Saxony and Baden-Wuerttemberg were unsuccessful. For its part Bavaria’s government said only loan guarantees would be considered.
The delegation will have to rethink its approach after German Finance Minister Peer Steinbrueck said taxpayers wouldn’t be funding Schaeffler: “It’s not the job of the state to intervene in cases in which business decisions were possibly not thought through enough,” Steinbrueck Berliner Zeitung.
Following the January 28 European Commission decision regarding the international marine hose cartel, Bridgestone has once more revised its consolidated financial projections for the 2008 fiscal year. The company anticipates net sales of 3,250 billion yen (£25.5 billion), an amount unchanged since it last revised its projections on December 22, 2008 and 170 billion yen (£1.3 billion) less than the company’s original 2008 year projection, announced on August 8, 2008. Operating income, at 118 billion yen (£926.7 million) and ordinary income of 64 billion yen (£502.6 million) also remain the same as the December 22 projection. Net income, however, is now projected to be 7.5 billion yen (£58.9 million), a reduction of 4.5 billion yen (£35.3 million) or 35 per cent from the December revisions. Last August the tyre major had anticipated net income of 66 billion yen (£518.3 million).
Following the announced departure of Dr. Alan Hippe from Continental AG and his appointment as CFO of ThyssenKrupp, the German tyre and automotive component manufacturer has announced a successor to fill Dr. Hippe’s shoes – for the time being. According to the German Press Agency, Continental manager Gérard Cordonnier will take on the job of acting CFO as of March 1. Cordonnier will assume this position in addition to his current role of financial chief of the company’s Interior division. He will not, however, become a member of Conti’s Board.
Cooper Tire & Rubber Company has informed interested parties that the company is to announce its 4th-quarter/year-end 2008 financial results before the market opens on Thursday, 26 February. Company management will discuss the financial results in a conference call beginning at 11:00 Eastern Standard Time (16:00 GMT) on the same day. The call will be webcast on the manufacturer’s investor relations webpage at www.coopertire.com. The webcast will be available until the following Thursday, 5 March.
German media reports, supposedly quoting industry sources suggest Schaeffler Group is discussing the possibility of either the federal or state governments taking a direct stake in Continental AG. So far, the federal government has clearly rejected such an idea and has only indicated the possibility of potential loans or loan guarantees. Whichever way it goes, we are likely to see the outcome tomorrow 30 January as after the summit meeting between state prime ministers Christian Wulff (Lower Saxony) and Horst Seehofer (Bayern) and German Economics Minister Michael Glos in Berlin.
Meanwhile Reuters reported that Continental AG posted a full-year operating profit margin of 8 per cent in 2008, quoting “several people familiar with the matter.” The sources also said that Continental manager Gerard Cordonnier would be appointed as new Chief Financial Officer of the company.
Yesterday the government announced a package of measures designed to defrost more than £2 billion automotive industry credit that has frozen as a result of the global economic downturn. The measures include guarantees to unlock loans of up to £1.3 billion European Investment Bank (EIB) guarantees for investment in lower carbon initiatives and loans or loan guarantees to support of up to £1 billion of lending for lower carbon initiatives for non-EIB backed projects. Shadow Secretary of State for Business, Enterprise and Regulatory Reform, Ken Clarke, criticised the measures for being “small beer.”
But will the funding offer assistance to UK tyre manufacturers? Here’s what the small print has to say: The measures will “apply to projects over £5 million.” Crucially the announcement specified that UK-based automotive parts suppliers with an annual turnover of £25 million or more could also be considered. UK-based manufacturers of construction equipment (such as diggers and bulldozers) and suppliers that meet the criteria of the framework will also be eligible to apply. The catch is that loan guarantees will only apply to “low carbon” projects. No date for the commencement of loans and loan guarantees under the framework has yet been set since it is dependent on European Commission clearance.
Bridgestone, Continental, Trelleborg and at least two other companies have been fined a combined total of 131.5 million euros by the European Commission for their role in the price fixing and rigging bids for rubber marine hose. The Commission’s decision follows the action of overseas authorities, such the US Justice Department, that has seen charges laid against a number of executives from British, French, Italian and Japanese firms.
The fines were announced on January 28 and Bridgestone received the largest penalty, 58.5 million euros. The size of Bridgestone’s fine, which was increased by 30 per cent, reflects its leading role in the cartel, which operated for more than two decades. Trelleborg’s French subsidiary has been handed a 24.5 million euro fine, while Continental, via its UK-based Dunlop Oil & Marine unit (a member of the ContiTech Group), has been fined 18 million euros.
Although 2009 promises to be a challenging time for UK truck fleet operators, Continental is convinced that possibilities remain for fleets to counteract rising financial pressures. The company comments that the selection of the right tyres from the outset. for instance, has been proven to have a considerable influence on operator running costs.
“Our new HTR 2 trailer tyre or HTL 1 Ecoplus make an important contribution to reducing costs in the transport sector,” states Geert Roik, senior vice president Research & Development, OE Truck Tyres at Continental in Hanover, Germany. The economy achieved by vehicles and fleets is influenced heavily by tyre rolling resistance, but as each fleet operator knows from experience it is difficult to determine the influence of tyres on fuel consumption – many external factors, such as the weather, driving styles and different loads play a part.
Continental Tire has named Jay Dhillon interim general market manager for Continental Tire Canada, replacing Guy Hardiman. Michael Raynes becomes interim controller, replacing Jayesing Heetoo. Continental said the changes are part of a continuing effort to improve the company’s processes and business practices.
Dhillon will be responsible for continuing the profitable growth, and improving the overall business operation of Continental Tire Canada. He will report directly to Andreas Gerstenberger, executive vice president of sales and marketing for Continental Tire US and Canada. Raynes will be responsible for evaluating and supporting the financial and credit processes and Canadian operations, while providing recommendations to management for both the PLT and CVT divisions. Raynes will report directly to Jay Dhillon.
“Continental Tire Canada has enjoyed phenomenal growth in recent years, and will continue to do the same in the future. These appointments will help align the necessary supporting business processes with continued growth of Continental Tire Canada,” said Gerstenberger. (Tire Review/Akron)
Continental AG and its controlling shareholder, Schaeffler Group, are reportedly seeking aid from two German state governments. According to a Bloomberg report, German federal government isn’t directly involved in the “advanced talks” with the Lower Saxony and Bavaria state authorities. On 27 January representatives of the IG Metall trade union told reports that any state aid should be used to help save jobs and “not the private wealth of company owners Maria-Elisabeth Schaeffler and her son Georg.” The union, which represents a total of 2.3 million employees, said workers should also get a say in running the company.
Meanwhile, credit rating agency, Standard & Poor’s, has lowered Continental AG’s creditworthiness two levels to ‘BB’ from ‘BBB-‘. According to an S&P statement the decision was made following an analysis of Continental’s revised business plan and the renegotiation of financial covenants. Continental AG is currently responsible for servicing an estimated 22 billion euros of debts.
Despite increased sales in 2008, JK Tyre’s fourth quarter results reveal a net loss for the quarter and reduced profits through the entire financial year. The company reports net sales of Rs 40,524.8 million (£591.4 million) during the 12 months to December 31, 2008, up 43.9 per cent on the 2007 yearly result. During the fourth quarter net sales were Rs 7,798.2 million (£113.8 million), a more muted 6.9 per cent increase on the fourth quarter of the previous year.
Speculation is mounting that Schaeffler Group executives are positioning themselves for a complete takeover of Continental AG. Following the ball-bearing maker’s successful bid for just under half the company, Schaeffler Group, is now responsible for 11 billion euros ($14.3 billion) of debt relating to the deal. However, the increasing negative global economic climate, especially with relation to the automotive supply business has led some observers to characterise Schaeffler as being backed into a corner. According to Bloomberg, “Schaeffler has one way out: gaining full control of Europe’s second-largest car-parts maker.”
Continental will now hold an emergency supervisory board meeting on 24 January (tomorrow), a gathering that has been arranged in the wake of Schaeffler’s reported demands for the resignation of Continental supervisory board chairman Hubertus von Gruenberg. According to the Financial Times this threat was delivered alongside an ultimatum – either Continental forces out von Gruenberg and gives Schaeffler representatives four seats on the board or the ball bearing member will push for the replacement of all 20 investor representatives on the 20-member board.
Two new senior appointments have been made at the Apollo Tyres’ owned companies Dunlop Zimbabwe and National Tyre Services (NTS). In a statement, Dunlop Tyres Group chief executive officer, Dr. Luis Ceneviz, said Mr. Kennedy Mandevani, who is currently Dunlop Zimbabwe managing director, will assume the position of group managing director for National Tyre Services. Mandevani’s portfolio will cover both NTS and Dunlop, said Ceneviz.
The ongoing struggle between Continental AG and its major shareholder, Schaeffler Group, took a new twist yesterday when the Financial Times (FT) reported that Schaeffler wanted to force our Conti’s supervisory board chairman, Hubertus von Grünberg. According to FT, Schaeffler executives have fallen out with von Grünberg over his “systematic sabotage” of their plans.
FT reported that von Grünberg was told he should resign and make way for Schaeffler to be given four board seats, or the ball bearing maker would force an extraordinary shareholders’ meeting to replace all 10 members. Neither side has commented publicly about the reports.
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.
