Tyre market up 20 percent in 2010; Bridgestone No. 1 again

ERJ staff report (TB)

Akron, Ohio -- The global tyre market, rocked by the recession of late 2008 and 2009, roared back in 2010, gaining back all the value it lost in the struggles of recessionary 2009 and more, rising nearly 20 percent in value to an estimated $152 billion.

The growth continued through the first half of 2011, with a gaggle of the world's largest tyre makers reporting 25-percent revenue growth collectively through mid-year, according to the 2011 Global Tyre Report, published in the September-October edition of European Rubber Journal.

In 2010, Bridgestone Corp. retained the top spot over Group Michelin, Goodyear and Continental A.G. for the third straight year as the top 11 positions in Tire Business' annual ranking of the world's largest tyre makers didn't change.

Within the top tier, though, Taiwan's Cheng Shin Rubber/Maxxis International has advanced to a virtual tie for ninth with Cooper Tire & Rubber Co., both at $3.36 billion in tyre sales, and Hankook Tire Co. Ltd. continues to chase the No. 7 rung held by Yokohama Rubber Co. Ltd. They reported 13- and 12-percent tyre revenue growth last year, respectively, leaving Hankook just shy of taking over the No. 7 spot.

The strength of the market measured in revenue may be slightly misleading, as more than half of the gain in value can be chalked up to price increases most tyre makers instituted globally throughout the year, trying to stay ahead of upwardly spiraling raw materials and energy costs.

There are 25 billion-dollar tyre companies in the 2010 rankings, up from 19 the year before, according to European Rubber Journal's analysis of the available data. The billion-dollar club looks to add at least three or four members next year, according to growth monitored through the half year.

The 10 largest tyre makers' sales collectively topped $100 billion for the first time, up 17 percent from 2009.

Bridgestone's hold on the top spot is reinforced by its 44-percent ownership of Turkey's Bridgestone BRISA, No. 37 on the list with $651 million in sales. Tokyo-based Bridgestone also owns a 19-percent stake in Finland's Nokian Tyres P.L.C., No. 20 with $1.26 billion in tyre sales.

Likewise, Singapore-based Chinese tyre maker GITI Tire Pte. Ltd., No. 15 with $2.21 billion in sales, owns 49 percent of Indonesia's P.T. Gajah Tunggal Tbk., No. 26 with $986 million in sales. Group Michelin also owns 10 percent of Gajah Tunggal, which is a contract manufacturer for some of Michelin's associate brands.

A number of mergers and acquisitions concluded in the past year (or still pending) are sure to affect the rankings next year and beyond, starting with Pirelli's agreements in Russia that could see the Italian tyre maker take over manufacturing assets there capable of generating annual sales of $715 million by 2014.

This development also will see Sibur Russian Tyre and Amtel Povolzhye Tire Complex J.S.C. fade from the rankings in the next couple of years.

Pirelli's agreements also contain a provision for the company to tie up with Nizhnekamskshina-No. 30 on this year's list with $768.7 million in sales-through its Russian joint venture.

Another major change is Titan International Inc.'s purchase of Goodyear's agricultural tyre business in South America and its pending acquistion of Goodyear's agricultural business in Europe.

Titan Chairman Maurice Taylor Jr. estimates the two acquisitions potentially could generate $400 million in annual sales each, pushing the ag tyre specialist easily into the $1 billion-plus club.

For Goodyear, the divestitures could reduce its annual sales by $500 million or more, if the European deal is finalised.

Toyo Tire & Rubber Co.'s acquistion of Malaysia's Silverstone Bhd. and majority control of Silverstone's Chinese affiliate Shandong Silverstone Luhe Rubber Co. Ltd. could add $250 million or more to Toyo's annual sales.

On a smaller scale, Conti bought India's Modi Rubber Co. Ltd.'s tyre business, which recorded 2010 sales of about $78 million.

Tyre company earnings rebounded strongly as well from those in troubled 2009. The average operating income/sales ratio for the dozen largest makers doubled to 8.1 percent, while the net income/sales ratio for the largest companies showed a 10-fold increase to 3.3 percent over 2009, when four of the 19 companies monitored reported net losses whereas in 2010 only one, Goodyear, was in the red.

New to the Tire Business' global tyre company ranking this year are: Shandong Sangong Tyre Co. Ltd., No. 42 with sales of $429 million; J.S.C. Rosava, Ukraine, No. 70, $106 million; Xingjiang Kunlun Tire Co. Ltd., China, No. 72, $90.3 million; and Modi Rubber Ltd., India, No. 74, $78 million. Of these, Modi was acquired recently by Continental and will not be part of the 2011 ranking.

Falling out of the ranking were: Dena Tire & Rubber Mfg. Co. Ltd., Iran, and Ralson (India) Ltd. for lack of updated data; and GPX International Tire Corp., US, which filed for bankruptcy in late 2009 and was liquidated during the first quarter of 2010.

The Top 75 global tyre companies are based in 25 countries. There are 24 companies from China - including four in the top 20 - along with 10 from India, five from Taiwan, four each from the US and Japan, three each from Russia, South Korea and Italy and two each from Indonesia,Thailand and Turkey.

From Tire Business (A Crain publication)