Tire Business staff report
Akron, Ohio -- Continental Tire North America (CTNA) Inc. turned the corner last year, returning to the black for the first time in 10 years after getting costs under control and reporting sales gains across the board.
Conti did not disclose exact sales or earnings figures, but CTNA CEO Matthias Schonberg said management is confident the company can at least repeat this performance in 2008, both in North America and throughout the Americas. Conti's tyre sales in North America were estimated at $1900 million (Euro 1300 million) in 2006.
The major change in turning the corner was getting the passenger/light truck tyre business operating profitably, Schonberg said, which the firm accomplished in part by rejuvenating the product line, starting with the General tyre brand in the US and the Euzkadi brand in Mexico, and achieving better pricing levels.
CTNA spent about $100 million over the past three years on product development, according to Andreas Gerstenberger, executive vice president, sales and marketing. The result is a General product lineup that is more than 50 percent new and will provide 80 percent market coverage this year with the launch of dozens more SKUs, including new winter tyre lines.
Schonberg said while the replacement end of the passenger/light truck business was profitable, the original equipment part was not, owing to the firm's inability to recoup fully the raw materials cost increases of the past few years. The company's commercial tyre business has been profitable for the past several years.
Messrs. Schonberg and Gerstenberger also pointed to the tyre maker's restructuring moves of the past few years --consolidating US tyre production at the non-union Mount Vernon, Illinois, plant, phasing out private brands, selling the off-the-road tyre business, reducing SKU complexity, etc. -- as playing a part in getting the firm's costs down.
CTNA is in the midst of a $170 million modernisation and expansion program at Mount Vernon, where the firm's first production of ultra-high-performance (UHP) tyres in the US started last October.
This will provide CTNA with much needed flexibility in the UHP tyre sector, Schonberg said, and will help alleviate rising costs associated with having to import tyres from Europe.
Conti also has invested $12 million in its plant in San Luis Potosi, Mexico, where it sources many of its light truck/sport-utility vehicle tyres, and is counting on the new plant in Camacari, Brazil, to double its output this year.
Moving forward, CTNA said it plans to broaden its Conti Gold rewards program with an entry-level category open to dealers who order as few as 300 tyres a year.
From Tire Business (A Crain publication)