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Mexico prepares its defense of NAFTA
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MEXICO CITY—Mexican auto industry officials are lining up their arguments to defend the North American Free Trade Agreement against President-elect Donald Trump's campaign promise to...
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  CLARK FREEPORT ZONE, Philippines—Yokohama Tire Philippines Inc. has commissioned an expansion of capacity at its car and light truck tire factory in Clark Freeport Zone, which...
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ARDL purchases land, property for expansion
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AKRON—For the first time in more than a decade and a half, Akron Rubber Development Laboratory Inc. is expanding. The family run business recently completed the acquisition of an 11-acre...
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New president excited to lead ASC
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Bridgestone drives forward; Tire maker's plan includes recharging Firestone
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Trelleborg suspension springs bolster Turkish tram project
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Hexpol adds new compounds to bio-based TPEs
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Supply side economics: Firms launch initiatives Chemours strengthens Viton brand program
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PITTSBURGH—Chemours Co. has revamped a licensee program designed to strengthen its Viton brand in the marketplace and get its rubber product maker customers to make the material their...
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Digital Edition
Digital Edition
Published on September 3, 2007

Hot 1st half gives tire makers optimism for '07

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Date Published September 3, 2007
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Following a strong first half, the world's largest tire manufacturers expect to post improved financial results for all of fiscal 2007.

The caveats, however, are possible higher raw materials costs and the lackluster state of the North American markets.

Bridgestone Corp., Michelin and Continental A.G. are among the most bullish, each predicting substantial earnings improvements for the year.

After reporting double-digit sales and earnings growth in the first half, Bridgestone raised its full-year net and operating profit forecasts-for a second time this year-to $1.54 billion and $1.74 billion, 28.1- and 12.7-percent increases over 2006, respectively.

Bridgestone attributed its positive forecast to a weaker yen and improved sales in the first half.

For the year, Michelin is banking on strong demand for truck tires in Europe, Asia and South America to boost earnings and help offset $80 million in additional costs related to higher raw materials prices this year, the company said in its first-half earnings results.

Conti management likewise is optimistic, based on the firm's double-digit growth in first-half sales and profits.

Goodyear continues to work on improving its balance sheet in the later stages of its multiyear turnaround plans. The tire maker was $118 million in the red for the half versus profits of $76 million last year, but the company's net income in the second quarter jumped to $56 million from $2 million.

Management is optimistic despite a less-than-satisfactory performance in the first half. Sales fell 6.2 percent as tire unit volume slipped 14.5 percent in North America, its largest operating unit.

Goodyear still faces some aftereffects from last year's strike by the United Steelworkers as well as its decision to exit certain segments of the private label tire business.

Cooper Tire & Rubber Co., which returned to profitability in the first quarter after eight quarters in the red, surged to a net profit of $38.4 million in the half.

Executives attributed the improvement to cost reduction and profit boosting plans announced in September 2006 as well as improved price and mix in North America and increased tire unit sales elsewhere.

Hankook officials said the South Korean tire maker remains on track to meet its goals this year as sales rose 13 percent in the half to $1.85 billion.

In addition, both Yokohama Rubber Co. Ltd. and Toyo Tire & Rubber Co. Ltd.-which have March 31 fiscal year-ends-revised upward their earnings projections for the year after reporting improved first-quarter results.

For the first six months ended June 30, Bridgestone, Continental, Cooper, Hankook, Michelin and Pirelli & C. S.p.A. achieved improvements in operating earnings, and Bridgestone, Conti, Cooper, Michelin and Sumitomo Rubber Industries Ltd. posted net earnings gains as well.

Only Goodyear posted declines in both, although its results don't include its Engineered Products division, which was sold for $1.48 billion Aug. 1.

Rod Lache, an analyst with Deutsche Bank, expects margin improvement in 2008 at Goodyear. Based on numbers provided by management, Lache wrote in a note to investors that the tire maker's margins could improve by 8 percent or better compared with his 5.7-percent estimate for 2007.

Four tire makers-Bridgestone, Conti, Cooper and Hankook-reported double-digit sales increases for the half, with Cooper posting the largest gain of 17.9 percent to $1.44 billion.

Bridgestone reported a 21.3-percent jump in operating profit to $827.3 million as sales grew 13.4 percent to $13.1 billion. Net earnings surged 61.3 percent to $429 million.

Cooper swung to a net profit of $38.3 million in the half from a loss of $25.9 million a year ago.

Conti's tire segments also saw improvements as sales were up 4.5 percent to $4.17 billion and operating earnings grew 62 percent to $559.1 million.

Michelin reported a 4.7-percent increase in sales to $11.3 billion and a 57.6-percent improvement in net earnings to $587.9 million.

For the full year, Michelin foresees industry shipments of passenger original equipment and truck OE and replacement tires in North America to

fall short of 2006 shipment levels, while shipments of replacement passenger and light truck tires should grow 2 percent.

Sumitomo suffered a 6.2-percent drop in operating income to $140.9 million as sales slipped 0.3 percent to $2.06 billion.