Goodyear, Toyo and Cooper were the losers in mid May, although Toyo shares – like those of Pirelli – had increased in the beginning of the month. In the automotive industry, BMW, Mitsubishi and Volkswagen were the heaviest losers. But the shares of DaimlerChrysler, General Motors, Honda and Toyota lost as well. DaimlerChrysler, Fiat and Volvo even fell to an all year low.
The Siam cement Group is to reduce its shareholding in the Michelin Siam Group from 50 per cent to 40 in order to concentrate on its core business. The shares will be purchased by Michelin, the other partner in the joint venture, giving it a 60 per cent stake. Michelin Siam has three factories in Thailand, plus a tyre mould making plant and a steel cord factory. The company makes Michelin brand tyres for vehicles from motorcycles to aircraft.
Despite excellent results and an on-going buy recommendation from Deutsche Bank, Continental shares are not rising. The management has announced that the “intelligent tyre” is to be fitted as OE from 2003 but refuses to name the car manufacturer. The management also feeds speculation regarding a joint venture partner for brakes in Asia. Will this help the share price to rise?
More and more nowadays, we hear that the tyre industry is becoming increasingly global and ever-more companies describe themselves as “a global player”. But what exactly makes a company a true global player? An in-depth article in TYRES & ACCESSORIES 6/2000 looks at the criteria by which a so-called ‘global player’ should be judged and concludes that the only three companies that merit this term are Bridgestone, Goodyear and Michelin. The article examines in detail each company’s performance in the world’s most important markets, their market shares and turnover figures, their strengths and weaknesses and their prospects for the future. The article goes on to examine the home markets of the global players (USA, Europe and Asia) and discusses the performances of the lesser players and what is likely to happen to them. Today’s global tyre market is one of acquisitions and alliances, mergers and new technological advances. Competition is intense and, in terms of market share, none of the big three seems able to leave its rivals standing, neither is the gap between the big three and the second three growing. Having said that, none of the second three stands a realistic chance of becoming a true global player in the future. The article gives a detailed, objective assessment of today’s tyre industry, together with some speculation concerning what might happen in the future.
Toyota, Nissan, and other Japanese motor manufacturers are reporting strong growth in global production for the first half of the year. This comes amid massive restructuring of the industry as European and American manufacturers take shares in Japanese businesses. However, the growth figures are tempered by across the board decreased in production in September, suggesting signs of a slowdown in the market.
In 1999 Continental’s turnover and EBIT “only” rose around 35 % while for the same year a 70% increase in net profits to 234.7 million Euros (1998: 138.2 million Euros) is reported. Therefore Conti boss Dr. Stephan Kessel is some kind of “disappointed and astonished” with regard to the performance of the company’s shares. May this be another reason why Continental has revealed that it would float its shares on the New York Stock Exchange some time within the next three to five years?
A Deutsche Bank analyst raised the Goodyear rating to “buy” because he believed in a turnaround story. Some analysts agreed, others saw Goodyear shares still only as “neutral”. But now it is different. Based on the latest statements from Goodyear, there are massive doubts regarding volumes and whether the pricing trend will be favourable. Analysts now believe that the situation will not improve before next year and that Goodyear shares will remain low.
During a press conference in Romania, Continentals’ CEO Dr. Kessel predicted very significant changes in the European original equipment markets. He pointed out that the consequences regarding the Firestone tyre recall will also have a great impact in Europe. Kessel believes that Firestone will lose many contracts and, among others, the Continental group would benefit and he added that there were already clear signals. But, signals yes or no, the Continental share price has fallen and it will be interesting to see whether news like this will stimulate the shares.
Superior Industries Int., North America’s leading manufacturer of original equipment aluminium wheels, has decided to repurchase 4 million of its 26.1 million outstanding shares. New orders of more than $ 350 million in the last twelve months has allowed an aggressive expansion of capacity, but the positive developments are not reflected in Superior’s stock price.
In an interview with the German publication Frankfurter Allgemeine Zeitung, Conti boss Kessel said that Pirelli would be an ideal partner for the tyre business, as this would produce significant synergies. To date, there has been no contact with the Italians over this matter.n According to Kessel, Continental need not fear any possible hostile takeover attempt because the car manufacturers would be very interested in maintaining competent and independent suppliers. In addition, the company could rely on strong backing from its individual important shareholders, such as Deutsche Bank, Dresdner Bank and Allianz insurance company, which together hold 16%. Kessel did not mention the fact that, in light of the low stock price, analysts had changed their minds last week and that most, if not all, of them do not regard Continental shares as a “buy” any longer. Hard times for Continental!
At a press conference, Bridgestone president Yoichiro Kaizaki dismissed rumours that claims for damages in the USA could force Bridgestone/Firestone Inc. into bankruptcy. The company has set aside $450 million to cover claims and any extra needed could come from the US company’s reserves, estimated at $2.3 billion. Despite the reassurance, Bridgestone shares fell by over 13 per cent in Tokyo.
Continental’s profit figures have improved for the sixth time running. Group turnover was 9.13 billion Euros (including Continental Teves business for the first time). EBIT rose to 511 million Euros.
Continental AG is to buy back up to 10% of its own shares, worth around 260 million Euros at the moment. This could be seen as a precautionary defensive measure in light of the rumours regarding a planned takeover attempt by a German conglomerate. Weeks ago, Klaus Friedland, Chief Financial Officer of the Group, said that it was likely that the Group would buy back shares in order to give these to interested institutional investors at a later date.
There is unanimity amongst financial institutes that anyone with investments in automotive shares should be very careful of their investments. The coming quarter does not look too promising; BMW, Peugeot/Citroën, Porsche and Renault (particularly thanks to Nissan’s better than expected results), should hold their position, but there seems to be no end in sight to the decline at DaimlerChrysler.
Once more German Car Producers were successful in the USA becuase DaimlerChrysler, VW, Audi, BMW and Porsche have increased their shares of the world’s biggest car market in April. Leader in the growth rates is the VW-brand Audi with an increase of 43.7 p.c. The complete US car market grew 10.9 p.c. in April.
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