UBS Wartburg downgraded the recommendation on Goodyear shares from “neutral” to “reduce”. Company stock, which hit a 52-week high of 10.74 US dollars four weeks ago, has tumbled in recent days. On Wednesday, even as officials were rallying the troops, the stock traded as low as 7.99, closing at 8.09 US dollars, down 27 cents.
While the US- Automobile Industry and most of the suppliers could improve their pension fund positions, Goodyear is, according to analysts, an exception. Compared with liabilities of 2.2 billion US-Dollars at the year end 2002; those could now have risen to 3 billion US-Dollars. Analysts from Deutsche Bank do not see potential for Goodyear shares and recommend a
cautious stance. They still have doubts that Goodyear can manage the long awaited turnaround in North America this year despite the fact that the
markets as well as the tyre replacement market have shown strong improvements.
ArvinMeritor has announced that it has signed a definitive agreement to sell its 75 per cent shareholdings in shock absorber producer AP Amortiguadores (APA) to joint venture partner Kayaba Industry. The sale is subject to regulatory approval, and terms of the transaction were not disclosed.
The shareholding of Apollo Tyres Limited (ATL) promoter Onkar S. Kanwar will come down by 6.54 per cent to 37.33 per cent after preferential allotment of 14.90 per cent of the company’s existing shares to French tyre manufacturer Michelin Group. After the proposed allotment of shares to Michelin, the stake of promoters and business associates in the company would come down to 37.33 per cent from existing 43.87 per cent, an ATL official said. ATL had announced in November to allot 14.90 per stake in the company to world’s largest tyre maker, Michelin, to enter into a technical alliance for manufacture of passenger car radial tyres by ATL and also set up a 51:49 joint venture with it for manufacturing and marketing truck and bus radial tyres.
After the October 31, 2003 registered increase in share capital a total of 13,070, Nokian Tyres plc’s shares have been subscribed with the 2001A option rights. These option rights are attached to the Nokian Tyres plc’s Option Program of 2001. An increase in share capital totalling 26,140 Euros was entered into the Trade Register on December 10, 2003. The shares will be traded on the Helsinki Exchanges together with the old shares as of December 11, 2003.
Hayes Lemmerz International has received approval from NASDAQ to begin trading on The NASDAQ National Market under the symbol “HAYZ”. The Company’s shares previously were quoted on the OTC Bulletin Board and in the Pink Sheets under the symbol “HAYZ”.
Tyre manufacturer Goodyear announced a net loss of 332.4 million US Dollars for the first nine months of this year. The net loss for the 3rd Quarter totalled $105.9 million. Sales in the last quarter rose around eleven per cent from 3.5 to 3.9 billion Dollars. However, volumes increased only by approximately two per cent from $54.4 (3Q 2002) to $55.3 million (3Q 2003). According to Goodyear, the turnover increased partly due to currency-exchanges and partly due to an improved product-mix. CEO Keegan is of the opinion that the efforts of the last months are bearing fruit. Nevertheless the fact is that the company disappointed again on the full line.
Goodyear’s 3rd Quarter 2003 results were taken up by the financial world with a deal of restraint and also with some disappointment. The Analyst at UBS Investment Research fears that because of the continuing loss situation in North America Goodyear shows signs of a possible breach of a covenant, while an analyst at Fitch Ratings asks impatiently, how long one has to wait for signs of the promised turnaround in North America? There was particular criticism that Goodyear was able to increase sales volumes only by approximately four per cent, in a market which grew by 6 per cent, while competitor Cooper added around nine per cent. Doubts were voiced that Goodyear can increase prices to the full extent needed, because of raw material price increases. While Goodyear mentioned positive trends, these were not apparent to observers.
Yesterday Goodyear communicated to the Securities and Exchange Commission (SEC) that they had not yet completed the restatement of the previously announced results for 1998 through to the second quarter of 2003 and, therefore, would not be in a position to submit the figures for the third quarter of 2003. Goodyear shares fell by 9 cents to 6.64 US dollars.
Hwa Fong Rubber manufacturer and distributor of Duro and Dunlop tyres, will list on the Stock Exchange of Thailand on Dec 15.
Yesterday we said that a Goodyear shareholder was instituting a class action against the company over its re-statement of profits, alleging that Goodyear deliberately misstated its profits in order to maintain an artificially high share price. Today, the company has been hit by a flurry of similar actions as lawyers across the US leap on to the bandwagon. A typical announcement from a firm with offices in Connecticut and California says that it has commenced a securities fraud class action claiming damages against Goodyear, Samir Gibara, Robert Tieken, Robert Keegan and Stephanie Bergeron and invites disgruntled shareholders who bought Goodyear shares at the time in question to join the action. No doubt other actions will be brought as more and more law firms try to get in on the act – something which will do nothing to improve Goodyear’s relations with both investors and financial institutions.
The image of scavengers circling a recently-dead corpse may be premature in the case of Goodyear, but it is one that comes irresistibly to mind as the news breaks of more and more firms of lawyers initiating class action lawsuits, claiming damages against the company and named executives following the recent announcement that income had been overstated by up to $100 million. Five separate law firms announced towards the end of last week that they would begin an action (the announcement from Goodyear was only made on the Thursday, so these were certainly quick off the mark) and, so far this week, another five companies have joined the list, with no doubt more still to come. So far, the effect on Goodyear’s stock has been negligible, with shares closing yesterday up 21 cents, at $6.55.
Nokian Tyres has put in an impressive third quarter performance, with better-than-expected operating profit of 21.7 million Euro, giving an operating margin of 16.6 per cent. The company increased its market share in Nordic countries to 31.5 per cent. These countries account for two-thirds of Nokian’s sales. The Finnish manufacturer also increased sales of winter and high performance tyres.
The revelation by Goodyear that it has overstated profits by $100 million over five years has led to deep concern among investors. One shareholder filed a lawsuit, alleging that profits were deliberately mis-stated in order to maintain a high share price. The day after Goodyear’s announcement, shares fell by 19 per cent, eventually recovering to close nine per cent down at $6.19. The episode underlines the uneasy relationship between Goodyear and its investors, with some analysts wondering whether it will cause a delay to the promised issue of new stocks and bonds.
The Vredestein Investment Consortium (Vico) has increased its shareholding in the Dutch company from 61.2 per cent to 96.8 per cent, following an offer tabled in August, to purchase Vredestein shares for 7.5 Euro. The tender period officially closed on 24th September, by which time Vico has purchased 3,035,594 shares, bringing its holding to 8,265,581 shares. Despite the ending of the tender period, Vico will still buy shares up to 15th October. The listing of Vredestein shares on the official market of Euronext N.V. will be terminated on 24th October.
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