DaimlerChrysler (DCX) management has said that the company expects the Chrysler division to lose 1 billion Euros in the second quarter – industry analysts had been predicting a 200 million Euros profit. Lower revenues from vehicle sales and continuing high incentives in the US market were cited as two of the main reasons. Analysts have changed their full-year forecast for Chrysler from a 700 million Euros profit to a 336 million Euros loss.
Fiat’s 1Q results were worse than forecast. Turnover for the Fiat Auto division was 4.9 bn Euros, against a forecast of 5.6 bn. Reasons given for this were de-stocking, a slower market and a flood at a Fiat factory, which led to lost production. Turnover at Iveco was down 5 p.c. and at Case New Holland, 18 p.c., virtually all due to currency factors.
Three years ago, Nissan had debts of 2,100 billion Yen ($17.4 billion) but the company has recently announced a cash surplus of 8 billion Yen. Last year’s operating profit was a record 737 billion Yen (5.5 bn Euros); an increase of over 50 per cent. Net profit was up 33 per cent, at 495 billion Yen (3.7 bn Euros). In addition, Nissan’s operating margin of 10.8 per cent is the highest in the industry. Chief Executive Carlos Ghosn forecast higher operating profits and increased unit sales for the year ahead.
Cooper Tire & Rubber has reduced its first quarter earnings estimate in response to falling US demand and rising costs – industry-wide, tyre shipments in the US fell 8 per cent during the first two months of this year. The new forecast from Cooper is for net income to be between 17 cents and 21 cents a share, compared with the figure given by CEO Thomas Dattilo in early February of 26 to 31 cents a share.
Bridgestone Corporation has reduced its profits forecast for the year by 43 per cent; down to 40 billion Yen (322.3 million Euros) from 70 billion Yen. This is a result of the planned investment in the corporation’s European operations of 400 million Euros and a one-off charge of 300 million Euros to cover the write-down of equipment. Analysts believe that Bridgestone is now concentrating on reviving its European operations, having concentrated on the US over the past couple of years, due to the Firestone recall. In the USA, Bridgestone/Firestone is set to make a profit of $70 million this year, compared to last year’s losses of $1.67 billion.
Analysts class BMW shares as the best investment among German car companies, with a price rate of 62 Euros. Although the economic forecast for this year was rather negative, BMW reported good sales last month in the USA.
Analysts at Deutsche Bank believe that this year Continental could achieve an EBITA of 600 million Euros. The management had forecast 530 million Euro. Although Temic was acquired, indebtedness has been reduced by 300 million Euros. Business in the USA is still bad, with losses of 100 million Euros (and more) expected. The objective of the chairman of Continental USA, Dr. Ulrich Wellen – to break even – seems not likely to be realised, at least in the near future.
Bridgestone Corporation appears to have come through the Firestone recall nightmare, with first half figures showing a net profit of nearly 24.5 billion Yen (218 million Euros), compared to a loss last year of 30.5 billion Yen. The company has increased its profits forecast by 5 billion Yen to a full year profits figure of 70 billion Yen and also announced that production would be increased at 12 plants over the next two years, boosting annual output by 8 million tyres. Bridgestone shares in Tokyo rose 6.4 per cent at the news, reaching 1,685 Yen.
A poll of analysts suggests that Bridgestone’s net profit for 2002 will treble. The forecast is for a net profit of 57.7 billion Yen (500.5 m Euro), compared with the 2001 figure of 17.7 billion Yen (152.3 m Euro). Analysts believe that the corporation is slowly putting the Firestone debacle behind it and there are hopes of a reconciliation with Ford. Other factors causing optimism include the weak Yen and an increase in Bridgestone’s business with GM.
Despite the admission of chairman and CEO Samir G. Gibara that Goodyear’s 4Q results were “disappointing”, some financial analysts have recommended the company’s shares as a “buy”. The results were better than forecast, plus the analysts are confident that Goodyear will start to turn things around before long.
MAN Nutzfahrzeuge, the commercial vehicle unit if MAN AG, expects to see a flat 2001 and is cutting 1,200 jobs in Germany and Austria. The vehicle manufacturer expects to see a 5-8% cut in the European truck and bus market in 2001 but intends combating this by increasing its own market share.
Analysts regard the price of Conti shares as relatively cheap, at 16.5 Euro. On the other hand, prospects for the group do not look very good; Continental’s Letter to Investors revealed that results in Europe for the first quarter of the year were better than expected. However, the situation for Conti General in the USA is very difficult, with results much worse than forecast and with little prospect of improvement. The plan to sell off the profitable Conti-Tech division will probably have a negative impact on the share price, analysts also believe.
Underlining the news from Goodyear, the US trade group the Rubber Manufacturers Association has cut its forecast of tyre shipments for 2001 from 316 million tyres to 303 million. Last year’s figure was a record 321 million tyres. July tyre shipments to car manufacturers were 5 per cent down on the same month last year, while commercial market shipments fell by 32 per cent. The RMA predicts shipments of 304.4 million tyres next year and 317 million in 2003.
Pacific Dunlop Chairman John Ralph told shareholders at the company’s AGM that joint venture company South Pacific Tyres could return to a break even position by the end of the financial year. Earlier this year, 890 jobs were lost at SPT as the company restructured in a bid to cut losses, blamed on an influx of cheap tyres from overseas.
In Tokyo, the Bridgestone Corporation has slashed its earnings forecast for the year by 81%. The revised forecast is US$ 116 million, down from the August estimate of US$ 596.6 million. Bridgestone also said that it would take a US$ 750 million charge to cover the costs of the recall and possible lawsuits; more than double the original charge estimate of US$ 350 million.
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