Chinese Leader Visits Hankook Tire Plant
Chinese President & Party General Secretary Hu Jin Tao visited the Hankook Tire plant in Huai-an, Jiangsu Province and talked to the workers. More than 40 other senior provincial officials were also on hand.
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Record Sales For Cooper In 1Q
Product NewsCooper Tire & Rubber’s first quarter results show sales at an all-time record high of $974 million; a Year-on-Year increase of 23 per cent. Net income increased by 56 per cent to $24 million (1Q 2003: $15 m). Tire Group operations showed a record turnover of $485 million, 23 per cent up on the 1Q 2003 figure of $396 million, and a 12 per cent increase in volumes and an improved mix. Sales of high performance tyres rose by 47 per cent, those of P-metric tyres were up 52 per cent and truck tyre sales were up 27 per cent. Despite this, operating profit was down slightly at just under $16 million. Raw material costs reduced operating profit by $18 million while product liability and litigation costs were $9 million higher than 1Q 2003.
Pirelli To Increase Prices In Europe
Product NewsPirelli has announced that it is to increase prices of tyres in all European markets, due to “considerable and unexpected increases in the cost of raw materials.” The increases will be between four and five per cent and will come into effect by June this year.
Continental to tackle double-digit US losses
Product NewsDeutsche Bank (DB) met with Continental management at Geneva to discuss the North American situation. Continental highlighted to DB that like Cooper and Michelin they had high confidence that price increases in the NA market would stick, as increases in raw materials prices had to be passed on to end users. Continental also told BD that the company is strongly committed to tackle double-digit OP losses in the US passenger car tyre division. The company though believes that breaking even in the US in 2006 will remain challenging, as it is not simply a cost reduction issue. Continental also indicated the high growth in the Automotive System sector (electronics and ESP), which should enable the company to maintain a current high 8 per cent OP margin. DB felt that this showed Continental as a great company focused on cost reduction; “however, we believe much of this good news is already in the share price, which doubled last year.”
Bridgestone Corporation Reports Sales and Earnings for Fiscal 2003
Product NewsThe group recorded a 96 per cent increase in net income in 2003, to ¥88.7 billion (0.8 billion US dollars), on a 2 per cent increase in net sales, to 21.5 billion US dollars. Operating income was basically unchanged, at 1.7 billion US dollars, and ordinary income rose 13 per cent 1.6 billion US dollars. Net return on shareholders’ equity was 10.5 per cent, compared with 5.6 per cent in the previous year. Contrasting geographical trends characterized the operating environment. In Japan, economic recovery was weak. In the latter half of the year the weakening of the dollar affected Japanese exports adversely. Escalating costs for natural rubber and other raw materials undercut profitability in all principal markets throughout the year. Sales of tyres increased 2 per cent to 17.2 billion US dollars. However, operating income in the tyre segment declined 4 per cent to 1.4 billion US dollars. Sales in Europe rose 20 per cent to 2.7 billion US dollars, and operating income climbed 87 per cent to 0.14 billion US dollars, reflecting success in focusing sales on high-value products and the results of a financial restructuring in the previous year.
Michelin net sales up, but down
Product NewsMichelin’s full-year 2003 net sales reached 15.4 billion Euro with sales volumes up 3.7 per cent. At constant scope and exchange rates, 2003 net sales are up 5 per cent. However, given the continued appreciation of the Euro, especially versus the US dollar, and further to the consolidation of Viborg in Group accounts in the 4Th quarter , net sales are down 1.8 per cent. Operating conditions (tire markets, exchange rates, raw materials …) were globally in line with Group expectations as indicated upon publication of 3 rd quarter net sales on October, 22. The main factors impacting financial year 2003 net sales were a 3.3 per cent increase in sales volume. A positive price / mix effect of +1.6 per cent at constant exchange rates. Impacted by a minus 8.3 per cent effect of the dollar/euro exchange rate.
Fire At Thai Goodyear Plant
Product NewsA fire that started early Wednesday at a tire factory owned by Goodyear (Thailand) PCL damaged a raw material warehouse, but other operations weren’t affected, a policeman told Dow Jones Newswires.
Bridgestone’s Australian plant looks safer
Product NewsBridgestone Australia (Adelaide) has stated that the future of its Salisbury tyre-making plant looks “more assured”. Settlement of an improved wage agreement and several other changes late last year had resulted in “modest improvements” at the loss-making operation. Local manufacturing losses, intense competition and the higher cost of raw materials had caused a 15 per cent drop in net profit in 2003 to 10.6 million Australian dollars, despite sales rising 5 per cent.
TYREXPO ASIA 2004
Product News‘Europe was top dog in the 1800’s, America was the great power of the last century and the next 100 years will belong to Asia’ (The Times).
A recent report by Goldman Sachs forecast that China will overtake America to become the world’s largest economy by 2040. As China’s economy grows, it will act as a magnet for raw materials and goods from surrounding Asian countries, giving a boost to the whole region. It remains one of the most exciting growth areas in Asia, with its potentially vast consumer markets and its low manufacturing cost base.
Singapore is a recognised gateway to Asia, attracting leading buyers from the whole of South East Asia and Australasia as well as the key decision makers from China and other Asian markets, providing a comprehensive mix of buyers and sellers from across the entire region.
The Asian region offers the tyre industry major opportunities for those companies committed to its long-term future. With Asian tyre consumption accounting for over 35 per cent of world demand combined with the enormous potential of tyre markets such as China and India where companies are making a name for themselves in the global tyre market, the Asian region offers investment opportunities to manufacturers and suppliers alike.
Tyrexpo Asia 2004 will be the 4th in the series of Tyrexpo Asia events that focuses on the fastest areas of growth in the tyre market and it is the only established tyre event of its kind in Asia. The 2004 event will be the largest yet and exceeds previous Tyrexpo Asia shows by over 25 per cent. The 2001 exhibition attracted visitors and exhibitors from over 63 different countries making it a truly international event. The show will once again be sponsored by Tyres & Accessories and Neue Reifenzeitung in addition to being strongly supported by specialist trade press and sponsors IE Singapore (International Enterprise Singapore). Tyrexpo Asia 2004 takes place from the 17 to 19 February at the Singapore Expo Centre and provides the perfect forum for the tyre industry to be stimulated by new ideas, products and market opportunities which reflect the importance of globalization within the region. The show focuses on every aspect of the tyre industry from tyres, retreads, tyre changing & repair equipment, to fast fit, garage equipment and parts & accessories. Amongst exhibitors are:
A-Z Formen und Maschinenbau, Big Wheel, Clipsal Airtec Pty Ltd, Collman, Columbus McKinnon, Del-Nat, Elgitread, DuroTyre, Federal Corporation, Fujikoki, Global Traco, Gummiwerk Kraiburg, Hangzhou Zhongce, Hock Lee, Italmatic, Jantsa, Kenda, Konimpex, Leka-Reifengrosshandel, Liew Koon, Mace Engineering, Midas, Mindtrac, Mohawk International, Myers Tire Supply International, Newera, Nexen Corporation, Pirelli Speciality Products, Pt Gajah Tunggal, Pt Mega Tires, Rema Tip Top, Samik Corporation, Sicam Tyre Equipment, Stamford, Tech International, Treadway Exports, Tyre Trading International, Value Tyres, Viewtum, Vipal and many more.
Bridgestone raises tyre prices
Product NewsBridgestone Corporation has announced that it has begun raising tyre prices by around 5 per cent in Asia, Oceania, the Middle East, Africa and Russia to offset the rising cost of natural rubber and other raw materials. The price increases vary by product and by market and largely apply to radial and bias tyres for passenger cars, light trucks, trucks and buses sold under the Bridgestone and Firestone brands.
Pirelli is on schedule
Product NewsFor Pirelli the current year is on schedule in the face of good sales and earnings. Higher prices for raw materials won’t burden Pirelli’s results before the new year. Talking to TYRES & ACCESSORIES at the SEMA show in Las Vegas, Dr. Francesco Gori, Managing Director of the Pirelli Tyre Sector, again affirms the good business in the USA. For the second time in a row Pirelli will end a year making a profit on the biggest tyre market in the world. This is even more remarkable, because Pirelli has just opened its MIRS-plant in Rome, Georgia, for which the company has incurred launch costs. During the last years the Italian company was pleased with an annual sales growth of about 20 per cent. This was partly because of the OE business Pirelli undertakes with car makers Ford and Chrysler. But not only that, the tyre maker has gained ground also on the replacement market after the sell-out through mass merchandisers has been stopped. In Latin America Gori expects Pirelli to be clearly number one ahead of Goodyear, whose Mexican activities structurally belong to the North American business (Nafta). The prospects are rather good that Pirelli will generate sales of more than 3 billion euro during this year solely with tyres; during last year this economic indicator stood at 2.857 billion euro. Exact figures concerning third quarter performance will be published on November 11.
Goodyear to re-state financial results
Product NewsGoodyear is to re-state its financial results for the years 1998-2002 and for the first two quarters of this year. This is due to the implementation of a new accounting system in 1999 and errors in inter-company billing systems. The adjustments will not affect Goodyear’s cash position, nor its access to credit facilities. Another effect is that Goodyear is providing estimated 3Q results, rather than a detailed announcement. The estimate is for a loss of between $90-$115 million on sales of $3.9 billion and this figure includes rationalisation charges of $56 million for a factory closure and employment reductions in North America and Europe.
Tyre manufacturers report first half results
NewsA number of tyre companies have published financial results for the first half of the year, with figures varying from not-so-good to impressive. These are analysed in detail in the magazine, but some brief highlights are as follows:
Michelin: Sales were down 6 per cent to 7.348 billion Euro, but excluding currency effects, this would be a rise of 4.4 per cent. Operating profit rose one per cent to 578 million Euro and net income was 165 million Euro; below what was expected, but this was almost entirely due to charges of 178 million Euro for restructuring in Spain, where 1,200 jobs will go over the next three years.
At an analyst meeting, Michelin executives were extremely cautious concerning the outlook for the rest of the year, forecasting a drop in volume for the second half and only a slight improvement in the impact of currency fluctuations. Other obstacles to improvement are the continuing high costs of raw materials and the continuing losses of the recently-acquired Viborg chain. The acquisition was a major factor in the 0.1 billion Euro increase in Michelin’s debt, to 3.9 billion Euro.
Goodyear: Second quarter (Q2) figures reveal that the company lost $73.6 million, compared to a net income in Q2 last year of $28.9 m. Sales were up nearly 8 per cent at $3.8 billion (3.5 bn), but volumes were down half a million units to 52.8 million pieces. The single most important factor in the deterioration of operating performance was an increase in raw material costs of around, $124 million, said Goodyear, even though this was offset in part by cost reductions, improved price and mix and a positive currency translation benefit of some $9 million.
The net loss for the first six months of the year was $236.9 million (1H 2002: $34.3 million loss). The 2003 figures included a rationalisation charge of $78.6 million to cater for staff reductions, while the 2002 figures were boosted by an income benefit of around £10 million as a result of the Ford tyre replacement programme. Sales for the first six months of 2003 reached $7.3 billion; 7.6 per cent up on the 1H 2002 figure of $6.8 billion. Tyre unit volume was down at 105.4 million units (106.3 m).
Continental: 2Q results exceeded the forecasts of industry experts. Compared with 2Q 2002, turnover was down 3.4 per cent to 2.825 billion Euro (2.925 bn), but operating income rose 11.3 per cent to 216 million Euro (194 m), against a forecast of 187 million Euro.
Of the four divisions, Car Tyres, Truck Tyres and Continental Automotive Systems (CAS) all showed slight reductions in turnover compared with 2Q last year, while ContiTech was up slightly. When it came to operating income, however, Truck Tyres was the only sector to show a decrease, while the best performance came from Car Tyres, which posted a 44.2 per cent improvement.
The group’s operating margin was 7.6 per cent and, while the car tyre and truck tyre divisions were slightly below this (6.7 and 7.4 per cent). ContiTech and CAS achieved 8.5 and 9.0 per cent respectively. Industry analysts were pleased at the figures, saying that the group is exhibiting “improving internal dynamics and a favourable mix of businesses with some growth and some cash flow contributors.”
Trelleborg Wheel Systems: TWS achieved sales for the first half of the year of 1,470 million Swedish Kroner (SEK), or 160.2 million Euro. Operating profit was up 33 per cent to SEK 84 million (9.15 m Euro), compared with last year’s first half figure of SEK 63 million (6.87 m Euro). During the second quarter, turnover was SEK 713 million (77.7 m Euro) and operating profit was SEK 39 million (4.25 m Euro).
Operating profit was favourably affected by the company’s restructuring programme, an improved product mix and increased productivity. High raw material prices were partially offset by price increases, especially in farm tyres.
Vredestein fire damage limited
Product NewsA fire at Vredestein’s raw materials warehouse at Enschede on Friday 22nd August was quickly brought under control by local fire brigades and the company fire brigade and personnel. As a result both the Vredestein production shop and the warehouse were saved and deliveries will not be affected.
Michelin’s First Half Figures – A Mixed Bag
Product NewsMichelin has released financial figures for the first half of the year. Sales were down 6 per cent to 7.348 billion Euro, but excluding currency effects, this would be a rise of 4.4 per cent. Operating profit rose one per cent to 578 million Euro and net income was 165 million Euro; below what was expected, but this was almost entirely due to charges of 178 million Euro for restructuring in Spain. Truck tyre sales were better than expected, while car tyre revenues were worse. Michelin’s debt increased by 0.1 billion Euro to 3.9 billion, due largely to the acquisition of the Viborg chain.
