Analysis: An encouraging quarter, so far, for tire makers

London - Quarterly results in, to date, from the tire industry (see list below) provide a useful gauge of current business-performance in this global sector.

While the picture is mixed, there are some consistent signals, not least the continuing strength of the North American market and the marked trading improvement in Europe.

And while news from South America was generally gloomy, passenger car tire business held up surprisingly well in China - given the reported pressures within that country’s  tire market due to domestic overcapacity and export duties.

A good weather vane was Michelin, which posted a mixed first-quarter performance: a 4.3-percent rise in sales of passenger car and light truck tires, but a decline of 3 percent in truck tires sales despite higher volumes.

The first three months may set the trend for the rest of 2016, with Michelin forecasting markets to remain mixed. Demand for passenger car, light truck and truck tires should, it said, continue rising in mature markets, while staying in line with relatively flat trends in ‘new’ markets.

More positive was Hankook, which reported a double-digit rise in operating profit helped by sales growth in Europe and North America, both in the OE and replacement markets. The Korean tire maker linked the gains, in part, to its increasing focus on the high-performance end of the market.

Likewise, Goodyear reported demand for the company's premium products as “robust” overall, tire-unit volumes at the group grew 2 percent: reflecting growth in the Asia-Pacific region, primarily in Japan and China. Replacement and OE tire shipments were both up equally.

Despite a 2-percent drop in sales, Cooper Tire & Rubber posted a sharp 29.5-percent rise in operating profit in the first quarter. Similarly, the company's Americas business registered strong gains in operating profit despite a drop in sales. Internationally, though, the firm said that an unfavourable price mix and negative foreign currency impact led to a loss.

Continental significantly increased sales volumes for tires in the first three months of 2016 compared to a year ago. The German group has, likewise, raised expectations for the rest of the year, increasing its group-wide forecast for adjusted EBIT margin from more than 10.5 percent to around 11 percent for the full-year.

May

5/5/ Avon Rubber – H1 Group revenue up 5% at €84.2m/Operating profit increased 6% to €11.4m/ Dairy brand Milkrite continued to gain market share/ Trading for protection & defence business “second-half weighted”/ Strong forward order book for DOD M50s and a growing pipeline of non-DOD opportunities.

4/5/ Cooper Standard – Q1 sales up 7.8% to $800m/ Sharp rise in net income from $21.1m to $30.6m/ Sales up on volume mix/ revenue up from acquisition of Huayu-Cooper Standard Sealing Systems Co. in China.

April

29/4/ - Hankook Q1 sales up 9.4% to €1.2bn/ operating profit up 23.6%  to €190m/Sales growth driven by improved business in Europe and North America/ Focus on UHP tires particularly in US, EU.

29/4/ - Continental Q1 sales up 3% to €9.85bn / EBIT margin up 11.3% from 10.6% / Rubber Group sales up 5% including currency effects /  Tire and rubber products volumes up

29/4/ - Cooper Tire & Rubber Co. Q1 sales drop 2% to $650m/ Operating profit increased 29.5% to $91m/ Operating margin up 3.4% to 14% for 2016.

27/4/ Fenner PLC – H1 revenue down to €356m, from €441.5m / Underlying profit before taxation down 37% to €10.2m/ Both AEP and CES divisions under pressure/ Declines mainly result of oil and gas pressure on AEP business and declining mining sector demand on CES.

27/4/ - Goodyear Q1 sales down 8.3% to $3.69bn / operating profit up 8% to $419m / Sales down on currency and Venezuela / Earning up on price mix, raw materials, higher volumes

20/4/ - Michelin Q1 net sales up 0.9% percent to €5.06bn/ Passenger car and light truck tires sales up 4.3% to €2.9bn/ Truck tires sales down 3% / Strong PCR demand in China, buoyant sales in India decline in South America.