Deutsche Bank Praises European Tyre Makers’ Margins
In its global automotive news brief, Deutsche bank has noted that while the three major European tyre companies experienced "very weak" volumes during the first half of the financial year, each of them reported strong resilient margins. Continental achieved an adjusted operating margin of 11.0 per cent, which was stable on the first half of 2008, Michelin 4.0 per cent (8.6 in the first half of 2008) and Pirelli Tire 7.6 per cent (8.8 per cent in the first half of 2008).
“These very good resilient results confirm pricing discipline in the industry,” comments the Deutsche Bank research team. “Furthermore, in the next quarters they will benefit from raw material price decline and from much less negative volume effect since sales is now matching sell out markets (dealers de-stocking is now over). And in 2010, the industry should benefit from a volume effect, which magnitude will be amplified by dealers rebuilding inventories. Overall, momentum should remain favourable for the sector.”