Pirelli SpA has announced that it is providing technical support for a $60 million USD expansion project by JSG Nizhnekamskshina, Russia’s biggest tyre manufacturer. Pirelli are also planning to open a commercial company in Moscow.
In 2001, the Michelin corporation generated a world-wide turnover of 15.775 billion Euro (+2.5% compared to 2000) and an operating profit of 1.04 billion Euro (-10.5% compared to 2000), thus showing a net profit of 314 million Euro (-28.4% compared to 2000). Under difficult economic circumstances world-wide, Michelin’s two main competitors, Bridgestone and Goodyear, could not even get close to Michelin’s operating profit, which corresponds to 6.6% of turnover. Bridgestone is still suffering from the consequences of the Firestone tyre recall in the USA, in 2000, and Goodyear has shown a loss for 2001. During a press conference at the end of February in Paris, Michelin’s COO, Edouard Michelin, clarified the course of business events during the last year, and Michel Rollier, Chief Financial Officer, offered a detailed view on the corporation’s figures. For the very first time, the corporation answered questions during a big press conference (other conferences were held in London and New York), and mentioned turnover and profit figures for the individual divisions.
Indonesia and Thailand have threatened to cut rubber production. Indonesia and Thailand are planning an immediate 10 per cent cut in production in a plan to push prices up by as much as 30 per cent. Malaysia is expected to follow suite. If the cuts are effective it could result in 20 per cent price rises in the retail prices of tyres. In order to sustain the cuts, Indonesia and Thailand are proposing to convert rubber plantations into alleged cash crops such as cocoa and coffee. It is expected that the main beneficiary of this move would be Russia, the main producer of synthetic rubber.
Hankook has in the past announced on more than one occasion its intention to improve capacity and focus chiefly on Europe. A concrete decision has not yet been made, Jung Rak Chey (Managing Director Europe Regional H.Q.) told the press in Rotterdam in March. He thinks that a factory in Europe seems most likely, but locations in North America or acquisitions in South East Asia are possibilities. Hankook could achieve further successes in European original equipment – the company is already a supplier for the Ford Transit – and Jung Rak Chey talks of negotiations with Volvo and Volkswagen. If a supplier does not have a factory near the customer, then the logistics have to be so efficient that it should seem that such a factory exists. The European Distribution Centre (EDC) opened in Rotterdam is impressive in size, and Hankook itself calls it a “milestone in the company’s history”. Capacity of the warehouse is 300,000 passenger car tyres, 20,000 light truck tyres, and 20,000 truck/bus tyres. Also, 250,000 car batteries are on storage, some of which were already filled in Korea but a filling station also exists in the EDC. Hankook’s target is to deliver its customers with three million tyres and one million batteries annually from the EDC. The EDC will supply 35 countries, from Finland to Portugal, from Iceland to Russia.
Russia’s leading tyre manufacturer, Nizhnekamskshina, is to boost capacity by 2 million steel belted radial car tyres by 2002. There are also plans to create new truck tyre lines by 2003, to produce 17.5, 21.5 and 22.5 truck tyres for the domestic market. The $60 million investment is being supplied by a major Russian oil company and will see car tyre production rise to 7 million units, though overall output will remain at around 12 million.
Nokian Tyres has reported its Q2 results, which proved better than analysts expected. While sales were as forecast (up 11.7 per cent to 95 million Euro), operating income was much higher than predicted at 8.5 million Euro, with an operating margin of 8.9 per cent (last year, 3.5 per cent). Results were helped by the 1.9 million Euro operating profit recorded by the Vianor retail chain. Analysts are cautious about the outlook for the second half of the year, with much depending on winter tyre sales.
The 5th International Autosalon in Moscow looks set to be the most successful yet. More than 600 exhibitors from 27 countries are showing their latest products. It is expected that the number of vehicles in use in Russia will double by 2005.
Nokian has released interim financial figures for the first nine months of this year. These show an increase in net sales of 7.4 per cent to 277.7 m Euro and an operating profit of 25.3 m Euro (11.9 m Euro for the same period last year). Net profit reached 9.1 m Euro (2.7 m in 2000). Nokian’s target for the year is to achieve a sales growth of around 10 per cent and improve on last year’s profitability.
Nokian Tyres is preparing to launch RoadSnoop, its first generation tyre pressure and temperature monitor. The sensor is battery powered and is mounted in the tyre at tyre changing and operates instantaneously upon turning the key in the ignition. It sends signals to a dashboard mounted monitor. Deliveries are expected at the beginning of March 2002.
Following Goodyear and Michelin, Nokian Tyres has released its half year figures. Sales rose 25% over the same period last year to reach 152.2 m Euro but operating profit fell from 5 m Euro to a loss of 1.5 m Euro. Net profit was also negative at -4.1 m Euro. One cause was increased raw material prices (rubber, oil, carbon black) up 8% over last year. Despite the loss, Nokian is broadly on track because, as a Scandinavian company, it generally makes huge profits in the second half of the year.
Since January 1999 Continental has held a 75% stake in Matador’s truck tyre production. Now rumours suggest that Continental is seeking the same deal for passenger car tyre production. There is no confirmation of this from Continental. Up until now Matador management has been keen to remain independent as far as passenger car tyre production is concerned. Matador see opportunities to develop passenger car market share throughout Europe as well as maintaining its successful position in Russia.