News from Notch Consulting, Inc.

May 4, 2011

Japanese auto production down 57% in March

Filed under: General — Notch @ 6:08 pm

The latest data from JAMA (the Japanese Automobile Manufacturers Association) indicate that Japanese production of automobile production declined by 57% in March compared to the same month of 2010, reflecting the devastating effects of the earthquake and tsunami. Passenger car production in March was down 57.7%, while truck production was down 54.1% and bus production was down 55.2%.

Production for FY 2010 (April 2010 to March 2011) totaled 8,993,975 units, up 1.5% from 8,864,908 units in FY 2009. This increase follows two years of declines.

Domestic sales declined 35.1% in March compared to March 2010, of which passenger car sales were down 37.4%, truck sales were down 21.3%, and bus sales were down 24.4%.

Century Enka expands nylon tire cord capacity

Filed under: Tire Cord — Notch @ 4:42 pm

India’s Century Enka Ltd. has completed the installation of additional capacity of 7,500 tons of nylon tire cord fabric (NTCF) in late April. The expansion raises the company’s total capacity for NTCF to 29,500 tons per year. The company is in the process of obtaining approvals from tire companies, and commercial production will be phased in over time.

Goodyear restarts damaged plant

Filed under: Tires — Notch @ 3:30 pm

European Rubber Journal reports that Goodyear has restarted its tire plant in Fayetteville, North Carolina after it was damaged by a severe storm in mid-April. In all, the factory lost about three days of production. Meanwhile, plants in Georgia operated by Pirelli Tire North America Inc. and Toyo Tire Holdings of Americas Inc. escaped unscathed from storms that ripped that area April 29.

Solutia: Flexsys restructuring complete

Filed under: Rubber Chemicals — Notch @ 3:14 pm

In its earnings call for 1Q 2011, Solutia’s management has indicated that the company’s restructuring of Flexsys’s rubber chemicals portfolio is essentially complete, though they left the door open to further divestments should the opportunity arise.

Here is a transcript of the call from Seeking Alpha.

In his remarks to analysts, Jeff Quinn, Solutia’s Chairman, President and Chief Executive Officer, said,

During the quarter, since we completed the promised reshaping of the other rubber chemical businesses by selling our DTC and Santoweb and Vocol businesses, these businesses combined would have accounted for about $40 million of revenue, last year with EBITDA about $7 million and EPS of about a nickel per share.

What remains left in the Other Rubber Chemicals businesses is only about $15 million in revenue. So essentially we are done with the promised reshaping of that portion of our portfolio.

In his prepared remarks, Jim Sullivan, Executive Vice President and Chief Financial Officer, also discussed the transfer of the company’s European headquarters following the divestitures.

During the quarter, we recognized gains totaling $17 million on the sale of Other Rubber Chemicals businesses, which were partially offset by charges, mostly non-cash in nature, related to the relocation of the company’s European regional office to Zaventem, Belgium. As we have exited nine core positions in Europe over the past couple of years, the space occupied at our Louvain-la-Neuve, Belgium was no longer a good fit.

The new facility in Zaventem is centrally located near the Brussels Airport and will reduce the company’s facility operating cost in the region going forward.

Finally, in response to an analyst’s question, Jim Sullivan indicated that Solutia may sell its remaining product lines in the Other Rubber Chemicals businesses should the opportunity arise.

Lucy Watson – Jefferies & Co.

This is Lucy Watson on for Laurence today. A question on the — or two questions on the 2011 outlook. Have you factored in divestiture of the remaining $15 million of sales from Other Rubber Chemicals businesses in your new outlook?

James Sullivan

No. Lucy, on that, really the $15 million, they’re there but it’s like that’s a very low maintenance little slug of revenue. We kind of groomed this portfolio to the point that some of the dilutions from doing it offset by the closing costs and the proceeds we brought in, all of that was in the segment of management time and focus and all of those kind of things was a net-net win for us. This all $15 million quite frankly, it’s one of those things that we’ll just kind of continue along. And if something really opportunistic happened and somebody came to us, we might do something with it. But it’s really not a big issue at all for us at this point. It’s just a real low maintenance little slug of revenue.

With these divestitures, Flexsys’s activities within the rubber chemicals market consist of CRYSTEX insoluble sulfur and SANTOFLEX antidegradants.

Tire Humor

Filed under: Tires — Notch @ 1:58 pm

There aren’t many opportunities to be funny when you cover the tire industry, but someone at European Rubber Journal jumped at the chance to write this clever headline in reference to Goodyear’s new fleet of blimps: “More Goodyear-led zeppelins in tyre makers future”

Like I said, when you cover the tire industry, the song remains the same.

Story here (subscription required).

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