Tire makers aim to build on 2022 gains amid rising costs

In general, the business trend among the world’s largest tire manufacturers was upwards in 2022, with double-digit increases in sales for nearly all major players compared to the previous year.

When it came to earnings, however, there were major exceptions to the positive trend: Goodyear  Tire & Rubber Co. and Sumitomo Rubber Industries  in particular posting substantial declines (See table).

Based on commentaries in the results statements from tire manufacturers, the key to maintaining profitability in 2022 was the ability to pass on sharp cost rises to customers – as well as progress in increasing the proportion of high-value tires in the sales-mix.

The impact of rising materials prices can be clearly seen at Michelin, which estimated the cost of raw materials ‘reported in cost of sales’ at €6.7 billion in 2022 versus €5.0 billion in 2021.

That is after factoring in all materials purchases, production and sales volumes, the valuation of raw materials, semi-finished and finished and product inventories. This included a €1,194-million hike in raw materials prices compared to 2021.

At Bridgestone, ‘conversion costs’ increased by Yen69 billion in 2022, the group reporting: “Energy costs at plants rose sharply amid high crude and natural gas prices in 2022.” The trend, it added, is expected to continue this year.

In 2023, Goodyear said it expects its raw material costs to increase by around $200 million compared to 2022 – including the impact of a stronger US dollar and higher transportation and supplier costs.

The US tire maker reported “$890 million of year-over-year incremental costs during 2022 related to inflation and other cost pressures, primarily higher transportation and energy costs.”

Much of these costs stemmed from Europe, where chairman and CEO Richard Kramer noted “big energy inflation in the fourth quarter driven by the [Ukraine]  war.”

Read the full report in the March/April issue of European Rubber Journal magazine or online featured content version via the 'Focus' tab on the ERJ homepage.