AKRON-Reflecting sluggish economies in many parts of the world, three foreign-based tire makers-Continental A.G., Sumitomo Rubber Industries Ltd. and Yokohama Rubber Co. Ltd.-recently reported decreased sales and earnings for 1993, compared with 1992. While only one, Yokohama, fell into the red, all echoed its comment that ``the company's operating environment was extremely challenging during the year.''
Continental's pre-tax earnings plummeted 52.3 percent, while those of Sumitomo plunged 31.9 percent, though the latter's net income slipped just 1.2 percent.
Though its pre-tax earnings were cut by more than half, Germany's Continental A.G. still finished the ``extremely difficult'' year in the black and reports improved earnings and sales in the first two months of 1994.
Earnings fell to $44.8 million (74 million German marks), while sales slid 3.3 percent to $5.7 billion (9.4 billion marks).
Business areas that turned a profit for the year were: European replacement passenger tires, North American truck tires and ContiTech industrial products, although ContiTech suffered measurable drops in both earnings and sales.
Conti recorded losses in its European original equipment and truck tire businesses, as well as North American passenger tires.
Investments fell 12 percent to $378 million, reflecting the completion of large projects in both the U.S. and Europe. The investment ratio dropped to 6.7 percent of sales.
The company's total worldwide employment at year's end was 50,974, slightly ahead of 1992. The employment number would have been down nearly 10 percent had Conti not added new subsidiaries in Germany and the Czech Republic.
Continental's board of directors will meet April 15 to discuss a dividend payment; the company last paid a dividend in 1990.
Tokyo-based Yokohama Rubber Co. Ltd. reported its first loss since 1983, as a weak domestic economy in Japan combined with the high value of the Japanese yen to push the company's earnings $1.85 million (207 million yen) into the red (currency conversions at year-end exchange rates).
In 1992, Yokohama earned $38.7 million, which represented a 6.3-percent decrease from the previous year.
Consolidated corporate sales fell 7.4 percent in 1993 to $3.57 billion (400.2 billion yen). Sales of tires-which accounted for nearly 72 percent of total corporate sales-dropped 6.6 percent to $2.56 billion.
Yokohama said sales of both original equipment and replacement tires declined in Japan, where car production fell 10 percent in the year and consumer spending was stagnant.
The company's export sales fell, due primarily, it said, to increased production at its U.S. plant in Salem, Va., and to sluggish economies outside the U.S. and Asia. Passenger tire production at the Salem plant grew to 5 million units in 1993, Yokohama said, adding it should increase further this year.
Profit margins on exports from Japan were reduced by ``significant fluctuations in exchange rates,'' the company said. Yokohama said it lost $62.5 million for the year on currency exchange alone.
The company said it has ``moved aggressively'' to respond to deteriorating business conditions by expanding its procurement of raw materials outside Japan, increasing production efficiency and reducing costs and long-term debt.
Though buffeted by the same ``severe circumstances'' in the Japanese economy that drove Yokohama into the red, Sumitomo Rubber Industries Ltd., which has more production outside Japan, managed to turn a profit for the year, though less than in 1992.
Sumitomo-the principal producer of Dunlop-brand tires worldwide-forecast a continued downturn in earnings and sales for 1994.
For 1993, the Kobe-based company reported a 31.9-percent drop in ordinary income (before extraordinary profit/loss and income taxes) to $71.8 million (8.04 billion yen), though net income edged down just over 1 percent to $50.8 million (5.69 billion yen).
The company's sales for the year fell 8.8 percent to $2.12 billion (237.5 billion yen). Tire sales, which accounted for 63.6 percent of the total, skidded 10.1 percent to $1.35 billion.
Replacement and original equipment tire sales were down both in volume and value, Sumitomo said, as were exports from Japan, due in part to the appreciation of the yen, which made Japanese-made products more expensive in other countries.
In the replacement market, the company said it had tried to stimulate sales by introducing a number of new radial passenger tires.
Looking at 1994, the company said it does not expect any near-term increase in personal spending or capital investment. It is forecasting a 1-percent decrease in net sales to $2.23 billion (at current exchange rates), while export sales are expected to slide 17.4 percent to $250 million. Net income is predicted to dive 38.4 percent to $33 million.
Europe Correspondent Bruce Davis contributed to this report.