Mixed fortunes for tire makers at Q3 stage

 Major tire manufacturers have reported very mixed sets of results for the first nine months, with major variations even between players operating in the same end-product markets and regions.

Michelin lowered its full-year outlook as nine-month sales were significantly impacted by lower volumes – down 5.3% year-on-year, including a 7.1% decrease in the third quarter. Full-year guidance for operating income was lowered from the previous estimate of €3.5 billion to €3.4 billion.

The revenue decline was seen across all segments, including passenger car/light truck, truck & bus and speciality, said Michelin, which linked the trend to a ‘downcycle’ in OE demand, within the automotive, truck, agriculture and construction segments.

“For several months Michelin has had to face increasingly intense negative economic factors, whether economic, climatic or geopolitical,” said group president Florent Menegaux. Geopolitical factors, he added, have had “a strong impact on most of our markets, particularly in OE.” This development, Menegaux said, led to “a significant drop” in sales volumes and a reduction in the activity of factories.

Continental AG, meanwhile, confirmed its previously issued outlook for the performance for its Tires business, while revising down guidance for industrial and materials arm ContiTech.

In its third quarter results announcement, the Hanover, Germany-based group noted improved business in Europe, boosted by “encouraging early sales of winter tires,” while ContiTech was impacted by weak demand in its key industrial and automotive markets.

Also navigating headwinds, Pirelli increased volumes helped by “marked” growth in sales of high-value products as product-mix improved 2.5%, while earnings (adjusted EBIT) gains were linked to improved volumes, price/mix and efficiencies.

Over the first nine months, the Italian group noted a “further strengthening” in sales of high-value tires, which represented 76% of sales, up two percentage points on the level seen in the first nine months of 2023.

Urgent priorities

In Japan, meanwhile, Bridge-stone Corp. has set ‘urgent management priorities’ to tackle structural changes in the automotive industry as nine-month earnings (adjusted operating profit) dipped year-on-year.

Furthermore, an increase of low-end imports, especially in Europe and Latin America, is accelerating changes the  “market, industry, and profit structure,” said Bridgestone, which now aims to enhance its sales-mix with a focus on premium tires, while bolstering global cost-reduction and restructuring initiatives.

After a difficult nine months, Sumitomo Rubber Industries (SRI) expects profits to fall substantially in full-year 2024, as it absorbs costs linked to the closure of its US tire plant.

While Japan’s economy is recovering, the tire & rubber products maker expects a “deceleration” in overseas economies linked to continued high interest rates in the US and Europe and weak real estate market in China.

More positively, Yokohama Rubber Co. (YRC) has reported record results with earnings-margin at 10.7% – “the highest ever for the first three quarters” – on stronger volumes, higher pricing, and improved product-mix.

Furthermore, a full contribution from Yokohama Trelleborg Wheel Systems (Y-TWS) over the entire period and a depreciation of the yen helped increase earnings, according to the group’s results announcement.

South Korea’s Hankook Tire also reported a big increase in third-quarter earnings on slightly higher sales ‘despite economic challenges in Europe.’ Sales of 18-inch and larger passenger car and light truck tires increased by 1.4 percentage points year-on-year to 44.8%, said the group.

Goodyear Tire & Rubber Co. responded to a hefty lift in its third-quarter earnings by raising its cost-cutting target by 50% to $1.5 billion (€1.37 billion) under its group-wide ‘transformation’ plan to the end of 2025.

Outside of its restructuring efforts, Goodyear noted favourable net price/mix versus raw material costs trends in EMEA, though these gains were partly offset by ‘inflation, other costs, and unfavourable fixed overhead absorption.’

In the Americas, both sales and earnings were down during the third quarter as volumes declined 8.3% decline to 21 million units, according to the Akron group.

For the fourth quarter, Goodyear expects global volumes to be down 4% year-on-year reflecting “weaker sell-out trends and high levels of distributor inventories of low-end imports.”