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.
Although the fire at Bridgestone’s factory in Kuroiso City is now under control, the after-effects are only now becoming apparent. Production has been halted indefinitely until the extent of the damage has been assessed. Spokeswoman Setsuko Ozaki, quoted on the Automotive News website, said “we have no idea when production will resume or how big a blow the fire will have on our earnings, but with an incident this big, there’s bound to be some impact.” Analysts suggest any impact on earnings would be small, but this didn’t prevent Bridgestone shares falling seven per cent on the Tokyo Stock Exchange at one point, against a market that rose two per cent overall. Shares in rival tyre manufacturers Yokohama and Sumitomo Rubber Industries rose by more than five per cent.
More than 5,000 residents have been evacuated after a major fire broke out at the Bridgestone tyre factory in Kuroiso City, 150 km north of Tokyo. The plant is located in a residential area and evacuated residents were provided with food, water and accommodation while 60 fire engines and a fire-fighting helicopter attempted – so far unsuccessfully – to bring the blaze under control. The plant covers 510,000 square meteres, employs 850 workers and makes tyres for cars, trucks and monorails. The cause of the fire is not known, but there have been no serious injuries to date. At the Tokyo Stock Exchange, Bridgestone’s shares fell by one per cent.
South African company Tiger Wheels, which claims to be Africa’s largest producer of wheels and distributor of tyres, has reported an increase in profit for fiscal 2003 of 41 per cent, to 114,9 million Rand (14.7 million Euro). Tiger’s shares rose 3.6 per cent at the news, to reach 14.5 Rand (1.85 Euro).
In a groundbreaking move at Goodyear the company has agreed to giving the United Steelworkers of America a seat on the board of directors. In return, the union members will give up raises for three years, pay more for health care and accept smaller pensions. Those are key points in a contract agreement reached last week by the company and the United Steelworkers of America. Union members will vote on the contract by mid-September.
The long-running talks between Goodyear and the United Steelworkers of America continue to drag on after the deadline of last Friday set by Goodyear. The USWA says that it needs more time to study the latest proposals from Goodyear, which were put forward on Sunday. It is believed that Goodyear wants to shut four plants in the USA (out of a total of 14) and the union is seeking guarantees on job security. Despite the uncertainty, Goodyear shares rose 3.9 per cent in New York to reach $5.80.
The Nordic Market is very different from the highly developed mass markets of the UK or Germany – both of which are recognised as the most highly developed markets in Europe. The Nordic market might be considered to cover essentially Norway, Sweden and Finland, and possibly Denmark – depending upon your point of view or your business strategy. In any of these countries logistics would give most typical regional wholesalers nightmares. In the case of the three northern countries deliveries are hampered by long distances, less developed road networks, and for around half the year, bad weather conditions – not to mention fjords and ferries in Norway. Denmark, being more densely populated and considerably less mountainous has a better transport system, but also relies heavily on ferries between the islands that make up much of the country.
Leif Kristiansen has a long history in the tyre trade and in 1993 was working with Vianor when he saw the need for a tyre retailer group that not only served as a buying point for tyres, but as a much wider partnership aimed at helping the independent tyre retailer compete in a market increasingly dominated by equities.
Leif Kristiansen says, “Dekk Partner is owned by the members, each with one share so that there is no controlling member. That is very important. There are no suppliers involved in the group and no producer can buy shares. We want Dekk Partner to be fully independent.
“Our members are free to buy and sell what they want from whoever they wish but we do have a loyalty rebate scheme for our members that encourages them to buy within the group. It is highly successful. With respect to the suppliers, there are none with a contract any longer than two years. So irrespective of the brand or the manufacturer, we work on two year contracts to keep the standard of service provided as high as possible.”
Shares in Singapore-based Stamford Tyres rose by over 13 per cent on news that the company’s net profit had risen from S$ 2.75 million (1.39 m Euros) last year to S$ 8.18 million (4.12 m Euros) for the latest fiscal year. This comes at a time when the Singaporean economy shrank by 11.8 per cent in the second quarter, as tourism was hit by the SARS virus and the war against Iraq led to a decrease in production, said the Government.
GM is to fund its pension fund deficit by raising $10 billion in the bond market by selling debt, replacing short term pensions obligations with long-term debt payments. Some analysts are sceptical about the move, though GM shares rose 2.6 per cent when the news was announced. Last year, GM’s US pension fund was underfunded to the tune of $19.3 billion.
Shares in Bridgestone rose 3.5 per cent on the news that the National Highway Traffic Safety Administration (NHTSA) had decided not to re-open an investigation into 27.5 million Firestone Steeltex tyres. Bridgestone shares out-performed the Nikkei index in Tokyo, which rose 2.1 per cent to break through the 9,000 barrier for the first time.
Deutsche Bank has downgraded shares in Nokian Tyres from “Buy” to “Hold”, although the analysts say that their positive view of the company remains unchanged and, compared to other European manufacturers, Nokian trades at a clear premium.
At its AGM, which coincided with the company’s 100th anniversary, Ford shareholders rejected proposals that would have weakened the Ford family’s hold over the company had they been accepted. Ford family members own four per cent of the company’s shares but control forty per cent of the voting rights. A further proposal, to set up a committee to investigate possible conflicts of interest between the Ford family and other shareholders, was also rejected, but attracted almost twenty per cent of the vote.
Continental A.G. has said that it cannot give any information concerning the identity of the seller(s) of 1.5 million of the company’s shares last week. These were sold on Wednesday at 18.4 Euros per share and, when news of the sale leaked out, shares in Continental fell by 0.4 per cent to 18.33 Euros. Traders believe that the seller may have been a fund.
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