Serbian tyre company, Tigar, has signed a contract for long-term co-operation with Michelin and the World Bank Belgrade, reports Tanjug News Agency.
Under the contract, Michelin aims to take over 50.6 per cent of Tigar by 2007. By 2010, the plan is for small shareholders to hold only 30 per cent of company shares whilst Michelin will own 70 per cent.
Tyre industry supplier Lanxess, a spin-off of German company Bayer AG, was brought to the stock exchange at the end of January. Now, US investment group Greenlight has announced that it has already purchased more than five per cent of Lanxess’ shares.
A new research report by the Motor & Equipment Manufacturers Association (MEMA) suggests that government intervention in the US steel market has caused a cost crisis that is hurting automotive and heavy-duty suppliers across the country, reports Tire Review. The MEMA report says that the result has been “unprecedented bankruptcies and job losses.”
The MEMA study, available online at www.mema.org, was written by economists Brian Becker and Kevin Hassett. The pair found that the steel crisis “triggered distortions in the steel market that have contributed to decreased availability, poorer quality and delayed deliveries of steel,” according to MEMA.
Sumitomo Rubber has released strong 2004 results, at the same time as announcing both the appointment of Tetsuji Mino as president.
Net sales were recorded at 3.41 billion euros. Operating income rested at 329.9 million euros, of which 238.4 million euros (equating to 72.3 per cent) came from tyres. This showed a decrease compared to 2003 where 82.6 per cent of operating income came from tyres. Net income was 138.9 million euros from 94.9 million in 2003 and net sales were 2.59 billion euros, or 76 per cent of overall sales.
Deutsche Bank analysts are expecting the price of Michelin shares to increase by over 20 per cent from their current value of 53 euros per share to 65 euros. The estimate follows Michelin’s recent financial activities such as its investment in Poland, its Q4 results and its announcement that it is disposing of its wheel business. These signals “show the management commitment to turnaround this business unit,” wrote Deutsche Bank.
“In our view this shows a great consistency with the management strategy and reinforces our confidence in the capability of Michelin to reach their mid-cycle target of 10 per cent as early as 2006,” it estimated. This translates into 6.5 euros EPS.
However a risk lies in further strong increases in raw material prices which Deutsche Bank fears will not be able to be passed on to the customer.
BorgWarner Germany GmbH now holds a total of 6,941,879 Beru AG shares, 69.42 per cent of the company’s share capital. Beru’s announcement follows an extended acceptance period for the voluntary public tender of its shares. The offer has been accepted for 639.209 shares or 6.39 per cent of Beru AG’s capital. BorgWarner had already acquired 63.03 per cent of the shares and voting rights (6,302,670) on 4 January 2005.
Nokian Tyres has revealed that it will issue a maximum of 1.074 million new shares in a directed share issue to selected investors today. This corresponds to 9.9 per cent of shares outstanding. According to a Deutsche Bank analyst, the move could be an early indication of a possible acquisition. “Nokian only has a track record of acquiring and integrating tyre retail and distribution companies. It has not integrated tyre plants historically,” they add. Despite a large investment programme, the analysts still expect 117 million euros of positive cash flow.
Four new members, including BorgWarner’s CFO and vice president, have been appointed to the supervisory board of Beru AG. At the request of Beru’s executive board, economist Dr Ulrich Wöhr, (Diploma Business Management), chartered accountant Robin J Adams, CFO and chief administrative officer of BorgWarner Inc, Anthony D Hensel, as well as BorgWarner’s vice president, Alfred Weber were asked to join the board. The appointments follow the execution of the share purchase agreement of roughly 62 per cent of Beru AG’s shares through BorgWarner.
Automotive supplier, Beru AG, has reduced its sales growth target, following lower than expected demand. The company now says that sales revenues should rise by at least 10 per cent in the current financial year with EBIT reaching at least 56 million euros. According to the company, an unusually warm winter, lower than expect demand for TPMS and lower sales in the field of diesel technology mean that its original 13 per cent sales goal will be unreachable.
Diversified services group Bidvest has acquired a 17 per cent stake in Tiger Wheels for 239.9 million (£20.65 million), according to a South African Business Report story. Last year, Bidvest acquired McCarthy Motor Holdings and also has an American call option to purchase a further 1.8 million shares by 30 April for 45 million (£3.89 million). If it exercises this option, it will increase its stake in Tiger Wheel to about 20 per cent. Bidvest chairman Brian Joffe will be appointed a non-executive director of Tiger.
Indian tyre stocks are riding high in expectance of a reduction in replacement tyre excise duty in the country’s forthcoming budget. According to sources quoted in India’s Business Standard, the expectance of a 24 per cent to 16 per cent reduction has led to renewed interest from institutional investors.
Yesterday Ceat shares rose 6.71 per cent to 75.50 rupees, Goodyear India stock went up 3.89 per cent to 70.85 rupees, MRF up 3.61 per cent to 2,733.05 rupees and JK Tyres up 15.41 per cent to close at 86.90 rupees, the magazine reports. The recent share price increase, however, is set against a background of increased raw material costs.
The shareholders of Olimpia SpA have agreed to allow the purchase of a further 700 million Telecom Italia shares. As chief partner in the company (holding 50.4 per cent) Pirelli could buy up to 300 million share, while the other parties (Edizione, Hopa SpA, Banca Intesa SpA and UniCredito Italiano SpA) will be able to buy 100 million each. Olimpia investors already hold 17 per cent of Telecom Italia’s shares. 700 million shares equates to roughly six per cent of Telecom Italia.
Market analysts at Morgan Stanley, have raised Continental’s stock price target from 52 euros to 60 euros. The Morgan Stanley analysts clearly believe that the shares have more potential than they first thought: “We are raising our price target based on the expectation that our current earnings forecasts are likely too conservative and have significant risk to upward revisions following fourth quarter results.”
Shares in Goodyear Tire & Rubber have dropped 10 per cent after a Deutsche Bank analyst gave the company a “sell” rating. The analyst suggested that the share’s value had increased to the point that it could no longer be sustained. Although many news sources have reported the news, one business website, Motley Fool, ran an article suggesting that this was just “another reason why investors ought not consider analyst recommendations.” The story goes on to highlight how Deutsche bank has applied the range of ratings to Goodyear and not once “correctly called the stock’s performance.”
The German Helaba Trust has changed its advice for Michelin shares to a sell rating. The announcement pre-empts Michelin’s quarterly sales results, which are due to be released on the 11 February. In the first nine months of 2004 Michelin’s turnover increased 4.6 per cent to 11.7 billion euros. The analysts believe that company will record fourth quarter sales of 4.3 billion, a one per cent increase. Their report suggests that this growth has been largely driven by the commercial vehicle sector, which it predicts will have been responsible for 1.1 billion euros of that total. The trust also suggests that the company’s passenger car sales remained virtually flat, with sales only increasing 0.3 per cent or 1.9 billion euros.
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