Raw Materials
Indian tyre major MRF has raised the prices of truck tyres and some other tyre sizes in an attempt to offset the impact of high rubber prices, but a senior company official has indicated that this increase is still not sufficient. Prices will rise by one per cent, but the company reportedly may again increase prices at the end of February, following the presentation of India’s federal budget.
Michelin’s full-year net sales totalled 16.4 billion euros in 2006, up 5.1 per cent following a 3.6 per cent increase in 2005. According to the company, Michelin’s price mix effect remained favourable (+4.7 per cent of sales). This, together with internal cost reductions enabled the group to offset most of the 800 million euros burden caused by increased raw material prices in 2005. However, the manufacturer’s net result was down 35.5 per cent to 573 million euros, reflecting large non-recurring restructuring and industrial plant closure charges. Operating income totalled 1.118 billion euros, down 29 per cent.
(Rubber Asia, Kerala, India) Rubber products are important to automobiles because they perform certain key functions better than any other known materials – functions that cannot be done by any material other than elastomers.
(SA Treads, Douglasdale, South Africa) When we first met Claudio Boezio in early 2005, he had just assumed responsibility for Continental Tyre SA in his role as MD. At the time and by his own admission, he was fortunate to inherit a well-run, stable ‘ship’. But if there’s one thing that remains constant in the tyre industry, it’s change.
The CEO of Hankook Tire, Choong Hwan Cho, has announced the company’s global sales target for 2007 is $US3.6 billion, a significant increase on last year’s realised US$2,5 billion. Hankook are also targeting an operating profit of US$340 million and a recurring profit of US$282 million.
Former Balkrishna Industries Ltd. executive director Yogeshkumar (Yogesh) Mahansaria and his brother Ashokkumar have reportedly quit the fast-growing Indian tyre producer, citing “family differences” as the reason. Yogesh has now teamed up with US equity firm Warburg Pincus to acquire Israel’s Alliance Tire for US$45 million. Alliance has been in negotiations with the two buyers, and the transaction is expected to be completed before June. The Alliance purchase forms part of a new venture that Yogesh Mahansaria has been quoted as saying he intends to float in the near future.
(Tire Review – Akron, Ohio)
by Mary Aichlmayr
Robert H. Oudshoorn has been CEO of Vredestein Banden BV since 1994. Prior to that, he was director of commercial operations at a Michelin-Okamoto joint venture in Tokyo and also worked as representative director for Groupe Michelin in South Africa.
(Akron/Tire Review) A new report from Frost & Sullivan, entitled “Indian Tire Aftermarket,” shows that the Indian tyre aftermarket earned revenues of $1,461.7 million in 2005 and estimates revenues to reach $3,414.6 million in 2012.
Goodyear Tire & Rubber Co. chief financial officer Richard Kramer has announced that the company will continue to “attack high-cost factories” as part of its programme to lower its worldwide operating costs.
The Saudi-based Islamic Development Bank (IDB) is planning to offer loans of approximately £4 million to help the development of Iran’s tyre industry. On January 2 details of a statement from the bank’s Iranian representative, Tahmasb Mazaheri, were made public. Mr. Mazaheri was quotes as saying that the purpose of the loan was for the purchase of raw materials for tyre production within the Islamic Republic.
The IDB grants loans according to the principles of Islamic Law for the purpose of fostering economic and social progress within Muslim nations and communities.
Indian textiles company Gupta Synthetics seems set to be entering the tyre raw materials market after announcing plans to invest 2.23 billion rupees (£25.5 million) to set up a nylon tyre cord fabric (NTCF) making and nylon filament yarn (NFY) making factory in the city of Silvassa.
The facility will produce the cord fabric and yarn for the tyre, textile and furniture industries and will have an output capacity of 8,128 tonnes per year. The NFY side of the operations should be producing output by October 2007 while NTCF production fabric will commence in 2008.
Headquartered in Johnstown, Ohio and founded in 1939, Tech International is a family business that describes itself as the world’s leading producer of tyre and tube repairs and wheel service solutions. According to the official literature, the company markets more than 5,000 products into over 110 countries throughout the world and is recognized as one of the top exporters in the United States.
In response to the ongoing rising cost of raw materials Yokohama Tire Corp. has announced it will increase the price of its OTR tyres by between 3 and 5 per cent as of January 1.
29 managers have lost their jobs at Goodyear Dunlop UK. The job losses are part of a restructuring programme, which will cut around 100 jobs in total. The management cuts will almost exclusively be from positions at the company’s TyreFort headquarters in Birmingham, with about 69 job losses coming from non office-based staff. However, at least some of the jobs lost at Hi-Q and TruckForce depots are a question of administration, with employment simply transferring to the various holders of the new franchise agreement instead of Goodyear Dunlop itself.
Five international synthetic rubber producers received fines totalling 519 million euros (£350 million, $682 million) from the European Commission after the group said they had fixed prices. The penalty is said to be the second largest fine of its kind in history. Royal Dutch Shell PLC, Eni SpA, Dow Chemical Co., Unipetrol AS and Trade-Stomil were fined by the EC. Bayer AG was found guilty but was not fined because it blew the whistle on the others, according to the EC. The EC said the group fixed pricing and shared customer information on buyers of butadiene rubber and emulsion styrene butadiene rubber – used widely in tyre production – between 1996 and 2002. Italy’s Eni got the largest fine at £185 million ($357.6 million), and Shell was hit for £108 million ($211 million).
Financial analysts questioned whether the news would lead to a significant drop in synthetic rubber prices following the recent collapse of natural rubber. If so this could add to a “significant raw materials bonanza coming up in 2007 for tyre manufacturers,” according to Deustche Bank analysts.
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