News from Notch Consulting, Inc.

August 12, 2020

Earnings down double-digits for Toyo 1st half sales

Filed under: Auto, General, Tires — Notch @ 8:39 pm

Toyo Tire Corp. released financial results for the second quarter of fiscal year 2020, projecting double digit declines.  Toyo posted 48.3% lower operating income for the six months ended June 30 on 15.7% lower sales. The company’s operating ratio fell from 8.6% to 5.3% and operating income fell to $73.4 million on sales of $1.39 billion. Net earnings fell to $4.8 million, down from 93.1%. Negative effects of lower sales and higher production costs were cited for the decline. Toyo said that tire demand hit bottom in April, and the replacement market has begun to recover in some regions, including North America. As auto manufacturers have resumed production, the size of the demand decline for tires for new vehicles has been shrinking.

Bridgestone expects 2020 sales to drop 23% year-on-year

Filed under: General, Tires — Notch @ 7:53 pm

On August 7, Bridgestone Corporation released financial results for the first half of 2020, attributing the negative effects of the COVID-19 pandemic for the 68.3% drop in operating income. Bridgestone forecasts the trend will continue for the full year, with sales falling about 23% shy of fiscal 2019 revenue.  Bridgestone reported a net loss of $203.7 billion, with an operating income of $477.2 million for the first half of the fiscal year on sales of $16.1 billion. Primary reasons for the lower earnings include reduced volumes and currency depreciation impacts. Gains from lower raw materials and operating expenses and improved price/mix effect helped offset the negative factors. Bridgestone noted a “particularly large depression in European and North American markets,” which prompted ongoing caution with regard to market conditions in those regions despite signs of recovery since the beginning of June 2020. The company said it expects moderate recovery in the near term but a “demand drop due to 2nd wave of COVID-19 forecasted over Q4,” with less impact of second wave expected compared to first wave.

 

July 17, 2020

COVID causes steep drop in European replacement tire sales in 2Q

Filed under: Coronavirus/COVID-19, Tires — Notch @ 6:13 pm

On July 14, the European Tyre and Rubber Manufacturers’ Association (ETRMA) released data for its members replacement tire sales for the second quarter of 2020. The figures show that the COVID-19 pandemic caused the worst sales results in the history of ETRMA.

Comparing the second quarter of 2020 to Q2 2019, passenger car tires sales declined by 31%, while the decline for the first half of 2020 was 22%. In truck tires, Q2 sales declined 23%, while sale for the first half of 2020 were down 14%. Agricultural tires fared the best, seeing a decline of just 4% in Q2 and 9% for the first half of 2020.

After having been shut for an average of 33 days due to Covid-19, all tyre manufacturers in Europe slowly resumed their production in May when most European countries eased their lockdowns. As a result, there was a slight upward trend in tyre replacement sales visible towards the end of the quarter. Whether this trend will hold remains to be seen in the coming months. Being a global industry, the recovery of the tyre sector is not just dependent on Europe’s situation but how other parts of the world and global trade routes continue to be impacted by and address the pandemic.

 

June 8, 2020

Goodyear forecasts 50% drop in tire volumes in Q2

Filed under: Coronavirus/COVID-19, Rubber, Tires — Notch @ 12:42 am

In a 424B filing to the Securities and Exchange Commission dated May 13, 2020, Goodyear Tire & Rubber provided an overview of its actions in response to COVID-19 and a view of the tire industry’s performance in 2020.

We currently believe that our largest volume declines will occur in the second quarter of 2020, with volumes down approximately 50% compared to the second quarter of 2019. Overhead absorption will also continue to be adversely affected by reduced plant production during the second quarter of 2020. We are currently planning for our production to be down almost 25 million units versus the second quarter of 2019 in order to reflect expected demand and to reduce inventory.

In addition, our other tire-related businesses are also being significantly affected by the weakening economic environment. Traffic and volume at our retail locations is low and the sharp drop in business and leisure travel is adversely impacting our aviation business. Our chemicals business is also feeling the effects of the decline in tire production. In total, the year-over-year earnings decline in our other tire-related businesses is expected to be about $150 million during the second quarter of 2020.

For the full year of 2020, we now expect our raw material costs will be a benefit of $50 million to $100 million compared to 2019, excluding transactional foreign currency and raw material cost saving measures. Natural and synthetic rubber prices and other commodity prices historically have been volatile, and this estimate could change significantly based on fluctuations in the cost of these and other key raw materials. We are continuing to focus on price and product mix, to substitute lower cost materials where possible, to work to identify additional substitution opportunities, to reduce the amount of material required in each tire, and to pursue alternative raw materials.

June 3, 2020

JK Tyre launches US operations

Filed under: Tires — Notch @ 10:42 pm

JK Tyre, one of India’s leading tire producers, recently announced the creation of a new entity, Western Tires Inc. in Houston, Texas, which will act as the company’s marketing arm in the United States. JK Tyre has been exporting tires to the United States for more than 20 years, and the new company represents an expansion of those efforts. JK Tyre imports tires into the US from its factories in both India and Mexico.

Cooper restarts Mexico plant

Filed under: Tires — Notch @ 9:33 pm

Tire Business reports (subscription required) that Cooper Tire & Rubber is restarting production at its tire plant in El Salto, Mexico. Cooper first idled the plant on March 21 due to COVID-19 concerns. The plant was restarted on April 13th but idled again on April 28 under orders from the Mexican government, which deemed the plant to be non-essential. Cooper has implemented new health and safety procedures at the plant, and production was scheduled to resume on a limited basis on June 1.

May 5, 2020

Tire production resumes at Toyo plant in Georgia

Filed under: Coronavirus/COVID-19, General, Tires — Notch @ 11:05 pm

On May 3, Toyo Tire Holdings of Americas Inc. will reopen its White, Georgia tire plant, ramping up gradually on a revised shift schedule.  The plant has been idled since March 30 due to the COVID-19 pandemic.

Toyo is implementing additional health and safety measures based on CDC guidelines.

Enviro completes share issue to Michelin

Filed under: General, Rubber, Tire Recycling, Tires — Notch @ 10:54 pm

Scandinavian Enviro Systems AV (Enviro) has strengthened its financial position by completing a directed share issue to Michelin.  The investment was part of a long-term strategic partnership that provides Enviro with significantly improved conditions for the global establishment of recycling plants.  A final agreement is expected to be completed by mid-2020.

Bridgestone Iowa plant confirms 8 employees test positive for COVID-19

Filed under: Coronavirus/COVID-19, Rubber, Tires — Notch @ 10:10 pm

Bridgestone Americas Inc.’s agricultural tire plant in Des Moines confirms 8 employees have tested positive for COVID-19.  The company is addressing the outbreak using protocols established before Bridgestone resumed production on April 13.

Enterprise Crisis Management Team has been monitoring the spread of the coronavirus and consulting federal, state and local officials to coordinate risk mitigation and business continuity strategies.

Bridgestone said the plant will remain in production but will continue to monitor the situation closely and adjust as necessary.

April 28, 2020

Partial production resumes at one Apollo plant in India

Filed under: Coronavirus/COVID-19, General, Rubber, Tires — Notch @ 12:43 pm

Apollo Tyres Ltd. has resumed partial production at its factory in Perambra, India after government directives exempted its operations from lockdowns, according to a stock exchange filing.

The tire maker idled production at other Indian facilities in Kalamassery, Limda, Gujarat and Chennaiother amid concerns over the COVID-19 outbreak, and will provide updates on the restart of production in these facilities as decisions are made.

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