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Profitable half year for many tire makers

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Of the world's major tire manufacturers, Bridgestone Corp. and Hankook Tire Co. Ltd. reported the strongest first half 2003 performance, chalking up double-digit-triple-digit in Hankook's case-increases in both operating and net income.

At the other end of the spectrum, Goodyear slid deeper into the red for the six-month period-recording a $186.7 million pre-tax loss and $236.9 million loss on a net basis-as the firm struggled to get its cost-savings initiatives fully into gear. Sales rose 7.6 percent, to $7.3 billion, on higher selling prices; unit volume was down 0.8 percent.

In Bridgestone's case, operating and net earnings rose 18.3 percent to $550 million and 30.6 percent to $267 million, respectively, while sales edged up 1.7 percent to $9.28 billion. In the Americas, Bridgestone Americas Holding Inc. reported a 42.5-percent dip in operating earnings, to $31 million, but returned to the black on a net basis.

Hankook reported 127- and 123-percent jumps in operating and net profits, to $83.3 million and $53 million, respectively, for the half year as sales increased 13.9 percent to $706 million. The company did not comment on the results.

Group Michelin, the 2002 global tire sales leader, reported slightly improved operating profits for the first half on better Asian and Latin American business and a richer product mix. Tough market conditions in Europe and North American markets offset gains in other areas.

Net income fell 34.9 percent to $182.1 million due primarily to restructuring charges, while sales volume increased 2.4 percent. A strengthening euro/dollar exchange rate, however, left sales revenue for the first half 6.1 percent behind 2002 at $8.21 billion.

Germany-based Continental A.G. reported a 14.9-percent improvement in operating income, prompting management to raise the full-year earnings outlook.

Conti achieved improved half-year earnings despite difficult conditions in the global automotive business, which accounts for about 60 percent of the firm's annual sales. Operating profits rose to $443 million while sales revenue was down slightly to $6.27 billion.

Additionally, the firm said its passenger tire business unit increased operating earnings by nearly a third, to $132 million, despite continued losses in North America.

Pirelli S.p.A. reported improved first-half financial results on ``increasingly good'' tire division results, despite turmoil in its cable sector.

Tire division operating earnings rose 14.4 percent, to $141 million in the half, shoring up the S.p.A. earnings, which edged up 3.2 percent. Tire sector sales inched up slightly to $1.68 billion, although Pirelli said the increase would have been closer to 14 percent when the exchange rate fluctuation is factored out. Tire tonnage sales were up 8 percent, the company said.

Cooper Tire & Rubber Co. suffered double-digit drops in operating and net income-down 45.9 percent to $75.9 million and 57.1 percent to $27.9 million, respectively-for the first half, as restructuring charges and higher-than-anticipated raw materials costs took their toll. The impact of raw materials alone on operating profit was more than $20 million vs. 2002, the company said.

The Findlay, Ohio-based tire maker's half-year sales were down slightly to $1.63 billion.

Yokohama Rubber Co. Ltd. and Toyo Tire & Rubber Co. Ltd. operate on a March 31 year-end and therefore haven't reported half-year results. Kumho Industrial Co. Ltd. had not reported half-year results by this issue's deadline.

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