Tags: Tire | Makers | Goodyear | Bridgestone | Continental | car | auto

Tire Makers Settle In for the Long Haul

Friday, 22 Apr 2011 01:04 PM

Beset by disasters and recession, auto-tire makers face a tough road ahead. But people still need to drive and to do that, they need their tires, so companies like Goodyear (GT), Bridgestone (BRDCY) and Continental (CTTAY) are instead focusing on growth over the long run.

Going forward, Goodyear expects to make capital investments of between $1.1 billion and $1.3 billion per year in 2012 and 2013, up slightly from an expected $1.1 billion to $1.2 billion in 2011.

Goodyear says it will invest between $500 million and $600 million each year in plant modernizations, expansions and new construction. In other words, into projects that will lead to future growth and profits.

"These investments will support a 3 percent to 5 percent annual increase in unit volume, focused on high-value-added tires in high-margin segments," the company says.

Goodyear’s annual sales for 2010 were $18.8 billion, up 16 percent from $16.3 billion in the 2009 period.

Bridgestone, meanwhile, reports that fiscal-year revenues were up 10 percent to $35.2 billion in 2010.

The Japanese earthquake, tsunamis, and ongoing nuclear issues had disrupted Bridgestone's production, but the company's plants there are back open for business. Japan's "automotive industry is facing acute and unprecedented problems relating to component and power-supply shortages," London-based auto analyst Paul Newton told Canada’s Financial Post in mid-March, soon after the event.

European tire giant Continental, meanwhile, reports 2010 sales hit $35 billion, up 30 percent from 2009. "We clearly surpassed the targets we set at the beginning of the year," company CEO Elmar Degenhart says.

"After a good start and in light of a production forecast of 75 million passenger cars worldwide, we are striving to increase sales another 10 percent."

While raw-material prices will increase, so will returns from past investments, he said. “Our strong growth is also reflected in our increased employee numbers: Continental created roughly 14,000 jobs worldwide in 2010 and counted around 148,000 employees as of the end of the year,” Degenhart adds.

“Our great efforts have paid off. We grew at a faster rate than the recovering automotive markets, especially in the emerging Asian markets.”

Moody’s upgraded Continental to three levels below investment grade in early April.

The change “reflects both a stronger-than-expected recovery in Conti’s operating performance for the fiscal year 2010 as well as a significant improvement of Conti’s liquidity profile,” Moody’s analyst Falk Frey said in the statement.

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Beset by disasters and recession, auto-tire makers face a tough road ahead. But people still need to drive and to do that, they need their tires, so companies like Goodyear (GT), Bridgestone (BRDCY) and Continental (CTTAY) are instead focusing on growth over the long...
Tire,Makers,Goodyear,Bridgestone,Continental,car,auto
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2011-04-22
Friday, 22 Apr 2011 01:04 PM
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