ERJ: Rubber & tire industry in numbers

Projects

Evonik Industries AG is increasing production capacity for precipitated silica at its site in Charleston, South Carolina, by 50%. The group is investing a “mid-double-digit million euro amount” in the project, the construction work on which is set to start mid-year.

German tire & technology group Continental AG is expanding its speciality tires production in Sri Lanka with a €13-million investment project. As part of the move, the tire maker will enhance the “local pre-production capacities” at its manufacturing site in Kalatura.

China’s Zhongce Rubber Group has issued more details about its project to establish a tire manufacturing plant in Indonesia. The new facility, located in Semarang and covering 500,000m2, is currently under construction and is expected to be completed within 10 months. The tire group is also mulling the construction of a new tire plant in Saltillo, central Mexico.

In Spain, Freudenberg Sealing Technologies has inaugurated a new production facility in Parets del Valles, near Barcelona, for the manufacture of automotive components. The €11-million new plant replaces FST’s existing factory at the same location, improving capacity of the facility by 15%.

In the meantime, Freudenberg Medical is building a second manufacturing site in Costa Rica, specifically focused on the production of minimally invasive catheters. The $25 million project will see the company expanding technologies to deliver “increasingly complex products” to global customers.

Waste tire recycler Pyrum Innovations AG has received the approval of the local council in Perl-Besch, Saarland, Germany, for the construction of its second plant in the region. Construction work on the facility is set to start in the second half of the year, with completion scheduled for end of 2025.

Meanwhile, Sweden-based recycler Scandinavian Enviro Systems and its JV partners Michelin and Antin Infrastructure Partners broke ground on the company’s flagship large-scale end-of-life tire (ELT) pyrolysis plant in Uddevalla.

Tire results

Michelin Group has delivered a strong performance in 2023 with profits up amid “adverse market conditions and currencies”. The French group saw segment operating income rise 5% year-on-year to €3.6bn, on marginally lower sales of €28.3 billion.

Fellow European manufacturer Nokian Tyres plc reported a strong performance for the final quarter of 2023, and expects ‘significant growth’ in 2024 as it prepares to complete expansion plans. Segment operating income rose to €33 million for the three-month period, up from a loss of €3.2 million reported for the same quarter last year. Sales were also up slightly, 1.6% year-on-year at €368 million. For the full-year the Finnish tire maker more than tripled segment operating profit to €65.1 million, from €17.8 million reported in 2022.

In the US, Goodyear delivered weak results with both sales and segment operating profit down compared to the year before. Total segment operating income came in at $968 million for the year, down from $1.27 billion the year before. Annual sales decreased 3.5% year-on-year to $20.0 billion, due mainly to lower volumes, primarily in Americas and Europe, Middle East and Africa (EMEA) regions.

In Japan Bridgestone Corp. reported a slight decline in 2023 operating income to Yen480 billion, down from the Yen482 billion reported the year before. Group sales were up 5% year-on-year at Yen4,313 billion, the Japanese group reported 16 Feb.

Toyo Tire Corp., meanwhile, saw a significant increase in revenue and earnings for 2023, due in part to higher sales in North America and lower costs. Operating income for the year came increase 74% year-on-year to Yen77 billion, on 11% higher sales of Yen553 billion.

Sumitomo Rubber Industries (SRI) also reported a strong recovery in 2023, driven by higher sales and ‘significantly lower costs’. The Japanese group posted a 350% year-on-year increase in business profit to Yen77.6 billion, on 7.2% higher sales of Yen1.7 trillion.

Korean tire maker Nexen Tire posted record-high annual turnover for 2023, at KRW 2.7 trillion, up 4.0% year-on-year on the prior-year level. Operating profit for the 12-month period came in at KRW186.7 billion, though Nexen Tire did not include a figure for percentage change versus 2022.

Hankook Tire also posted an impressive 88.1% year-on-year increase in operating profit for 2023, to €940.1 million, on sales 6.5% above the prior-year level at €6,329.5 million. And, while fourth quarter revenue dipped 3.8% year-on-year to €1,570.2 million, operating profit jumped to €346.4 million, from the prior-year €152.8 million.

India’s Apollo Tyres reported a 48% year-on-year growth in nine-month profits to INR34 billion, on 4% higher sales of INR191 billion. For the three months to end of December 2023, the Indian tire maker posted an operating profit of INR12.0 billion, up from INR9.1 billion reported the year before. Sales for the period were up 4% at just under INR66 billion.

* Apollo Tyres results for first nine months of financial year started 1 April 2023

Materials

Swedish polymer engineering group Trelleborg AB saw a 4% year-on-year increase in fourth quarter sales to SEK 8,421 million while earnings lifted 6% year-on-year to SEK1,424 million, corresponding to an operating margin of 16.9%. For full-year 2023, net sales from continuing operations, increased 14% year-on-year to a record SEK34,286 million. The earnings gains reflected: 2% organic growth, 7% from structural changes and 5% from currency movements.

Meanwhile, Datwyler Group reported a significant decline in earnings (EBIT) for 2023, due mainly to underutilisation, loss of Covid-related business and higher costs. The Swiss group saw earnings fall 20% year-on-year to CHF 120.4 million, while earnings margin dropped to an ‘unsatisfactory 10.5% level’, from 13.0% the year before. Datwyler maintained revenue at CHF 1.1 billion.

Materials supplier Zeon Corp.’s elastomers business was impacted by slow demand for latex used in rubber glove despite an uptick in third quarter synthetic rubber sales. For the quarter ended 31 Dec 2023, the business unit reported a 2% year-on-year decline in revenue to Yen55 billion, reflecting a 22% drop in sales of latexes and an 8% fall in chemicals. Synthetic rubber sales, meanwhile, grew 2% year-on-year to Yen42 billion.

In Norway, Elkem SA’s silicones business saw a significant recovery in the fourth quarter of 2023 with earnings returning to black for the final three months of 2023. Fourth quarter earnings rose to NOK68 million, up from a deficit of NOK52 million in the same quarter in 2022. Sales for the period fell 16% year-on-year to NOK3.5 billion. For the full year, however, the business unit remained in red, with negative earnings development of NOK605 million, down from a profit of NOK2.0 billion the year before. Sales for the full year fell 26% to NOK14.3 billion.

In the carbon black business, Cabot Corp.’s Reinforcement Materials posted a sharp 31% year-on-year increase in first quarter earnings to $146 million, on a marginal drop in sales to $641 million. EBIT rose by 37% to $129 million, mainly driven by “improved unit margins from higher pricing and improved product mix” in calendar year 2023 customer agreements.

Orion Engineered Carbon also registered strong growth in rubber carbon black earnings for 2023, despite lower volumes and revenue. The business unit reported adjusted earnings of $312 million for 2023, up nearly 37% compared to the year before. Rubber black volumes fell by nearly 4% year-on-year to 710 kilotonnes, while sales dropped 5.3% to $1.28 billion.

Trade

German rubber industry saw a 5% year-on-year decline in production during 2023, according to data published by the German Rubber Industry Association WDK. Tire production dropped 6% year-on-year to 470 kilotonnes in 2023, while technical rubber manufacture fell 4.2% to 1.15 million tonnes. Sales, however, were up 10% over the previous year at €11.4 billion, mainly reflecting higher prices, in the tire and automotive segments.

The EU new car market returned to growth in January, following a year-on-year decline recorded in the final month of 2023. New car registrations in January grew 12% year-on-year to 851,690 units, according to data provided by the European Automobile Manufacturers Association (ACEA) 20 Feb.

The US Department of Commerce has lowered antidumping duties for passenger car and light vehicle tires from three major South Korean manufacturers Hankook Tire & Technology, Kumho Tire Co. and Nexen Tire Corp. The original duties for Hankook and Nexen were 27.05% and 14.72% respectively, while Kumho’s rate along with "all other" Korean tire makers stood at 21.74%. Following the review, Commerce said it was reducing the rates for the three tire makers, with Hankook’s duties down to 6.3%; Kumho to 5.4% and Nexen to 4.29%.