AKRON (Aug. 29, 2016) — In the global tire world, 2015 was a bit of déjà vu all over again.
There was only one change in the ranking among the 20 largest tire makers, as Japan’s Toyo Tire & Rubber Co. Ltd. slipped ahead of South Korea’s Kumho Tire Co. Inc. for the 13th spot, based on Toyo’s slight growth and a sales decline by Kumho last year.
In one sense, though, the dollar — or more precisely, the shifting value of global currencies against the dollar — played as big a role in this year’s rankings as the companies’ performances. The value of most of the world’s major currencies shifted vs. the dollar by between 5 and 20 percent in 2015 vs. 2014.
This is seen in the estimated total value of the global industry, which dropped nearly 12.5 percent to $160.1 billion, roughly on par with 2010.
The glaring exception was the Chinese remnibi, whose value shifted only 1.3 percent. However, most of China’s larger tire makers suffered lower revenues in their home currency based on slowing domestic demand and the effects of growing import restrictions in major export destinations like the U.S.
- This story appears in the Aug. 29 print edition of Tire Business.
The U.S. dollar-denominated sales figures in the ranking are based on average annual currency exchange figures, in order to avoid unusually high or low exchange rates at year-end.
Bridgestone Corp. retained the No. 1 spot for the eighth straight year, with tire-related sales of $24 billion, comfortably ahead of Group Michelin’s $22.1 billion and Good¬year’s $14.8 billion, according to Tire Business research.
Tire Business ranks tire makers based on their revenue from the sale of tires they’ve manufactured, excluding sales of steel cord, synthetic rubber or carbon black to third parties as well as non-tire items such as auto-service-related revenue at company-owned retail stores.
Bridgestone, Michelin, Goodyear and Continental A.G., for example, report hundreds of millions or even billions of dollars in revenue from their respective captive retail networks, and Bridgestone, Michelin and Goodyear derive a measurable amount of revenue from the sale of synthetic rubber or other raw or semi-processed materials to third parties.
Bridgestone’s position at the top is solidified by its minority ownership holdings in two other Top 75 companies — a 43.6-percent stake in Turkey’s BRISA/Bridgestone-Sabanci Tire Mfg. (No. 31 with 2015 sales of $792.1 million) and a 14.6-percent stake in Finland’s Nokian Tyres P.L.C. (No. 19 with $1.78 billion in sales).
Overall, nine of the 21 publicly traded companies outlined in this article reported tire business sales declines in 2015 vs. 2014, including double-digit drops by Cheng Shin Rubber Industrial Co. Ltd., Kumho Tire Co Inc. and Titan International Inc.
The largest gains by any of the top tier companies were by Michelin’s and Continental’s tire divisions, with 8.4- and 6.4-percent increases, respectively, when reported in their “home” currencies.
After translating to dollars, only a dozen of the companies in the Top 75 reported increased sales last year vs. 2014.
Collectively, the top 10 tire companies accounted for slightly more than 63 percent of the world’s tire sales last year, based on Tire Business’ numbers—essentially unchanged from a year ago, the second straight year that the top tier has defended its position vis-à-vis the rest of the global competitors.
Continental remains comfortably positioned at No. 4 with sales of $10.8 billion, ahead of Pirelli’s $6.93 billion.
Sumitomo Rubber Industries Ltd., South Korea’s Hankook Tire Co. Ltd., Japan’s Yokohama Rubber Co. Ltd., Taiwan’s Maxxis International/Cheng Shin Rubber and China’s Zhongce Rubber Group make up the rest of the Top 10.
There were four acquisitions/mergers of consequence in the past year that will affect future rankings.
China National Chemical Corp.’s successful bid to take over Pirelli has yet to manifest any measurable changes in Pirelli’s financial reporting, but the firms recently disclosed that Aeolus Tyre Co. Ltd. has agreed to buy ChemChina’s two truck and bus tire subsidiaries and a 10-percent stake in Pirelli Industrial, the Italian tire maker’s commercial tire business unit that’s being spun off.
At the same time, the deal calls for Aeolus to sell an 80-percent stake in its passenger car tire unit to Pirelli. The truck tire aspect of the deal involves ChemChina’s Double Happiness Tyre Industrial in Taiyuan, Shanxi Province, with 2.1 million unit annual capacity, and Qingdao Yellowsea Rubber in Qingdao, Shandong Province, with 1.2 million unit annual capacity.
Combining Pirelli’s truck and farm tire assets with those of ChemChina’s is expected to create an entity that Pirelli estimated would be the fourth largest commercial tire business globally, with estimated annual revenue of about $3 billion, including $1.6 billion or so that would be subtracted from Pirelli’s accounts.
At this point, the parties haven’t disclosed how much revenue Pirelli will gain from absorbing some consumer tire assets from ChemChina, but reducing Pirelli’s consumer tire-related annual sales by a billion dollars or more would put Sumitomo Rubber and Hanook Tire in position to challenge for fifth and sixth.
The combined ChemChina/Pirelli truck tire business would claim a spot in the Top 20.
Also, Yokohama’s recently completed acquisition of ATC Tire Ltd. will boost Yokohama’s annual sales in years to come by upwards of $500 million, closing the gap between it and Hankook for the No. 7 ranking.
In addition, Cooper Tire’s pending acquisition of a 65-percent stake in China’s Qingdao Ge Rui Da Rubber Co. Ltd. eventually would generate a few hundred million in revenue, based on the entity’s projected output of up to 3 million truck tires a year.
Finally, Trelleborg A.B.’s $1.25 billion acquisition of Mitas A.S.’s parent CGS Holding A.S. will result in an entity with annual tire-related sales of more than $800 million — good for a spot among the top 30 tire makers.
New to the rankings this year are five companies from China, including four from Shandong:
- Shandong Yongtai Group of Dongying, China — No. 32 with sales of $750.7 million;
- Shandong Yinbao Tire Group of Shandong, China — No. 51 with sales of $381.9 million;
- Shandong Rongsheng Tyre Co. Ltd. of Rongsheng, China — No. 52 with sales of $370.3 million;
- Shandong Huitong Tyre Co. Ltd. of Laiwu, China — No. 68 with sales of $164.8 million; and
- Yanchang Petroleum Group Rubber Co. Ltd. of Shaanxi, China — No. 74 with sales of $137.9 million.
Dropping out of the ranking this year were: Shandong Hengyu Tire Co. Ltd. of Dongying City, China; Shanxi Suanxi Tyre Co. Ltd. of Qingxi, China; Beijing Shouchuang Tire Co. Ltd. of Beijing; Vee Rubber Corp. Ltd. of Bangkok, Thailand; and Qingdao Yellowsea Rubber Co. Ltd. of Qingdao, China.
All were supplanted by companies with larger sales in 2015.
There are 29 Chinese companies in the 2015 ranking — including five among the top 20 — along with 10 from India, five each from Taiwan and the U.S., four from Japan, three each from Russia and South Korea, two each from Italy and Turkey and one each from Argentina, Belarus, Czech Republic, Finland, France, Germany, Indonesia, Iran, Singapore, Thailand and Vietnam.
Average operating earnings ratio among the 20 largest tire makers was 12.4 percent, essentially unchanged from 2014.
Seven of the 21 publicly traded companies that Tire Business monitors for this comparison reported lower operating income in 2015 vs. 2014.
Titan International reported an operating loss for the second straight year.
Nokian Tyres P.L.C. and BRISA-Bridgestone were the most profitable, percentage-wise, with 21.8- and 19.5-percent operating ratios.
The average net income ratio for the group of 20 was 5.9 percent, a 1.5-percentage-point drop from 2014. Seven of the top 21 firms registered lower net income last year vs. 2014 and two — Titan and Kumho Tire — were in the red.
The average sales per employee for the dozen publicly traded companies that provided employment data was $212,515, down roughly 11.5 percent from 2014.
Nokian Tyres had the highest sales per employee at $338,068, ahead of at $338,068; Cooper Tire at $326,011; BRISA-Bridgestone at $304,653; Toyo Tire & Rubber Co. Ltd. at $297,361; and Hankook Tire at $268,682.
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