ERJ: Rubber & tire industry in numbers

Review of the key figures and data to emerge this week from leading players in the tire & industry: 

Projects & investments

Bridgestone is to end all production and sales of commercial tires in China by H1/24: with the cessation of TBR production at Shanghai-based Bridgestone (China) Investment Co. Ltd... and withdrawal from the commercial tire business in the Chinese market. On 26 Jan, the group completed a previously announced plan to cease production of TBRs at its Bridgestone (Shenyang) Tire Co. Ltd plant in Shenyang, China. The unit had capacity to produce about 4,300 TBR tires/day. In late 2021, Bridgestone closed a TBR facility in Huizhou, China, with capacity to produce 4,400 tires/day.

General Science has started construction work on its Yuan1.4bn (€180m) expansion project at its Cambodian tire production plant. The 18-month project will add capacity for 3.5m units of semi-steel radial passenger car tires and 750k all-steel truck bus tires per year at the plant inaugurated in April last year. Once the expansion is completed, the site in Sihanoukville Port Special Economic Zone will have total capacity to produce 8.5m units of PCR tires and 1.6m units of TBR tires per year.

Freudenberg Sealing Technologies has trebled production of its pressure compensation elements, designed to enhance the safety of EVs. The move follows major new orders for DIAvent HighFlow elements, particularly from one Asian and one US automotive group. FST launched an automated high-tech production cell for the 'high-flow' product in Reichelsheim, Germany at the start of 2023: adding a second cell there in December. A third production line is to be operational at FST’s Berlin facility in H1/24, followed by the start-up of “at least one additional production line” in early 2025 at its site in Shelbyville, Indiana.

Sinochem Dongda, formerly Shandong Blue Start Donga, has broken ground on a 240ktpa polyether polyols unit in China’s Quanzhou City, Fujian Province. The plant is expected to be commissioned by early 2025, expanding Sinochem’s position in the ‘high-end’ polyurethane market.

M&A

Titan International Inc. has acquired Carlstar Group LLC for around $296m, the Illinois maker of off-highway wheels, tires, assemblies, and undercarriage products announced 29 Feb. The purchase price – $127m cash and $169m equity – is about four times Carlstar's 2023 adjusted EBITDA of $73m. With 2023 sales of around $615m, Carlstar makes tires and wheels for markets such as outdoor power equipment, power sports, trailers, and certain agricultural and construction equipment. Titan posted ‘income from operations’ of $101m on net sales of $981m for 2023.

Financials

Sumitomo Rubber Industries has exceeded its 2023 targets, achieving a business profit rate of 6.6%, compared to an initial target of 2.9%. Rate of invested capital (ROIC) stood at 5.7%, compared to the target of 2.6% initially planned. During 2023, business in North America turned profitable, “making more progress than initially planned.”

Goodyear expects challenges to continue in EMEA, despite current restructuring efforts in the region. Two major factory closures in Germany and an admin restructuring worth $100m, it said, are just the “beginning [of] the work.” Goodyear reported a recovery in Q4 earnings in EMEA, posting an operating income of $6m, up from a loss of $80m the year before. Net sales in EMEA of $1.4bn increased 2.6% compared with Q4/22. For the full year, EMEA sales dropped to slightly to $5.6bn, while segment operating income fell 72% to $17m.

Aura, Finland-based Reka Industrial – now solely focused on rubber-product manufacture – more than doubled annual earnings in 2023 to €37.6m, up from €15.2m in 2022. Revenue, however, fell 54% yoy to €92m , reflecting Reka's sale last April of its cables business to Nexans. In 2023, the Reka Rubber segment’s turnover remained stable at €30.6 million, while earnings fell by more 53% yoy to €1.2m.

Tire manufacturers’ share-price trends

Market reports

Natural rubber

NRfutures closed the trading week ended 23 Feb “strongly higher” across all major exchanges, Japan Exchange Group reported. JPX linked the recent price highs to “significant speculative and Chinese commodity fund buying”.

Selected NR futures price trends on major trading exchanges

Chemicals

Output of petrochemicals in the EU was 10.6% lower compared to 2022, reflecting a marked downturn polymers at 10.5% year-on-year, Cefic reported. Basic inorganics and speciality chemicals saw declines of 5.2% and 6.3% yoy. By contrast , China last year reached its highest production levels since 2015, posting 9.6% growth over 2022 – contributing significantly to the overall 2.3% global production increase.

Last week’s figures