After an April to June period punctuated by negative EBIT and a net loss, tyre maker and automotive components supplier Continental says it is “looking ahead to the second half of the year with optimism.” It is also maintaining its full-year outlook despite a current headwind that chief financial officer Katja Dürrfeld describes as being “rather like a hurricane.”
In a market hit by the systemic impacts of the conflict in Ukraine and the health crisis, the Michelin Group reports that its net income fell by 18.3 per cent despite a year-on-year increase in sales. The tyre maker nevertheless considers this a good result “in an extremely unsettled environment.”
UK car production in grew in May 2022 for the first time since June 2021. The Society of Motor Manufacturers and Traders (SMMT) report that a total of 62,284 units left factory gates during the month, a rise of 13.3 per cent. SMMT notes, however, that the increase must be viewed in context against May 2021, which was still suffering significantly from pandemic-related headwinds. Output remains 46.3 per cent below the pre-pandemic month in 2019, with ongoing supply chain issues, increasing economic uncertainty, rising business costs and disruption caused by the war in Ukraine.
Due to the war in Ukraine and subsequent, tightening sanctions, Nokian Tyres plc has determined that it is “no longer feasible nor sustainable” to continue operations in Russia. The Finnish tyre maker’s Board of Directors thus decided today to initiate a controlled exit from this market. Exit preparations start immediately and Nokian Tyres will evaluate different options for its departure, with “due consideration to local employees and legislation.”
After suspending its manufacturing activities in Russia on 15 March, Michelin now confirms that it is “technically impossible to resume production,” due in particular to supply issues, amid a context of general uncertainty. It says Michelin Group is “therefore compelled” to plan the transfer of all of its Russian operations by the end of 2022.
When the going gets tough, diversify. This strategy helped storage systems specialist Arcom weather the storms of the past two years. The Polish company is once again enjoying strong demand, both within the tyre industry and beyond. We caught up with sales manager Marcin Smulski during The Tire Cologne to find out more.
Although the war in Ukraine and subsequent sanctions continue to “cause significant uncertainty” for Nokian Tyres’ operating environment, especially in regards to its business in Russia, on Friday the company reported that demand for its tyres has nonetheless remained good. For this reason, and after successfully implementing price increases to mitigate the impact of inflation, Nokian Tyres has raised its net sales guidance for 2022.
Pirelli & C. Spa has reported a strong set of first quarter 2022 results which show revenues and pre-tax profits (adjusted EBIT) were up 22.2 per cent and 35.4 per cent respectively despite considerable turmoil related to the war in Ukraine and the resultant sanctions against Russia, where Pirelli runs two tyre factories. However, the tyre manufacturer has also revised down full-year estimates due to the same “geopolitical tensions”.
Announcing its financial results for the first quarter of 2022, tyre maker and automotive technology firm Continental states that it “performed well” during the period despite “an increasingly turbulent market environment.” It describes its Q1 2022 tyre business as “strong.”
Although Russian tyre maker Voltyre-Prom recently spoke of potential opportunities arising from the war in Ukraine and related international implications, majority shareholder Titan International confirms it will not be investing in this business any time soon. Details of Titan’s relationship with the Russian operation were set out in the US-based firm’s 10-Q financial report for Q1 2022 and further commented on during a teleconference held on 3 May.
Results of a survey conducted on behalf of Kwik Fit suggest 69 per cent of motorists have changed their driving behaviour since the beginning of the year. Altered habits include cutting down on ‘non-essential’ car journeys, something 35 per cent of the 2,000 respondents admitted to doing. Drivers of petrol or diesel cars are almost twice as likely to cut down on such trips, with 40 per cent doing so as opposed to 22 per cent of electric vehicle (EV) drivers.
The effects of the Ukraine war are not present in Nokian’s first quarter reporting, published on 28 April. The company has seen good levels of Q1 growth versus 2021, especially in its car tyre sales, but also in its commercial tyre business. However, with the manufacturer highly leveraged on Russian manufacturing and European sanctions against the country ramping up, it has announced to investors that all bets are off regarding its 2022 forecasts. The negative effects are largely related to passenger car tyre sales – Nokian explains that its “Heavy Tyres” are produced in Finland. It adds that while it has stopped the distribution of these products in Russia, “Nokian Tyres has never sold tyres to the Russian army, and the Russian Federation is not a customer of Nokian Tyres.”
Following the withdrawal of its 2022 guidance on 28 February, Nokian Tyres has commented that it expects net sales and segments operating profit in 2022 to “decrease significantly compared to 2021.” The tyre manufacturer is the most acutely affected by the Ukraine-Russia war, as analysis previously published on Tyrepress shows.
Michelin Group has reported that its first quarter 2022 sales amounted to 6.5 billion euros, a 19 per cent increase on the first quarter of 2021. According to the company, price increases and strengthening replacement demand helped it offset headwinds including operation disruptions and inflationary pressures exacerbated by the conflict in Ukraine plus the resurgence of Covid-19 in China.
On 25 April 2022, the UK Government announced a further tranche of trade sanctions against Russia. The new sanctions, which were introduced by International Trade Secretary Anne-Marie Trevelyan and Chancellor of the Exchequer Rishi Sunak, include import bans on silver, wood and high-end products like caviar. At the same time, the government has raised tariffs by 35 percentage points on items from Russia and Belarus, including diamonds and “rubber products”. Additional duties of 35 per cent were already introduced on “new pneumatic tyres, of rubber” on 25 March 2022.
Pirelli
Nokian Tyres
Nokian Tyres
Michelin; Jefferies
Igorn; Pixabay