AKRON-Four tire makers reported mixed financial results so far this year as various factors influenced their businesses.
Alliance Tire Co. (1992) Ltd., Hankook Tire Co. Ltd., and Kumho Tire Co. Inc. reported first quarter results while Toyo Tire & Rubber Co. Ltd. reported its fiscal 2005 results.
Alliance Tire reported a 59.4-percent improvement in its pre-tax profit for the first quarter as production output increased 22.3 percent.
Hadera, Israel-based Alliance reported profit before taxes of $5.1 million-11.4 percent of sales-up from $3.2 million in 2004's first quarter. The tire maker also reported a tax benefit of $4.1 million on its results, pushing net profit up to $9.2 million. With the nonrecurring tax benefit included, Alliance's net profit increased 187.5 percent.
Sales in the quarter rose 17.1 percent to $37.6 million from $32.1 million last year. Exports, which account for almost 80 percent of Alliance's business, grew 16.7 percent to $29.3 million. Local market sales also grew 18.6 percent in the quarter, the company said.
``We see a continued increase in the demand for our tires, which is reflected in an increase of our backlog orders (totaling) $18.2 million compared to $13.6 million in the first quarter of 2004,'' said Joseph Anglister, president. ``Our first-quarter profits are in step with our continuing growth.''
Despite a 6.3-percent increase in sales in the first quarter, Hankook saw operating profit slide 2.4 percent on the negative effects of higher raw materials costs and foreign currency translation losses.
Seoul, South Korea-based Hankook's sales grew to $464.1 million during the quarter on the strength of 10.3-percent higher tire export revenue, the company reported. Operating profit slid to $66.7 million, but net earnings rose 4 percent to $55.3 million.
During the quarter, spending on raw materials rose, including a 31-percent jump in synthetic rubber costs and a 15-percent hike in steel cord prices.
The firm did not elaborate on its sales performance, other than to say sales of ultra-high-performance tires rose 59 percent in the period, accounting for $67.1 million in sales, or 14.5 percent of total sales.
Separately, Hankook Tire's China operations reported a 26.4-percent jump in operating earnings, to $18.4 million, on 16.1-percent higher sales of $117.7 million.
Hankook's first quarter performance is in line with the company's forecast for fiscal 2005, according to the tire maker's 2004 annual report.
Coming off record export sales in 2004, Hankook said it expects exports-especially those of ultra-high-performance tires-to spur sales growth of about 8 percent in 2005 as domestic sales growth slackens.
In 2004, Hankook reported a 32.2-pecent jump in operating profit to $195.7 million on the strength of high-margin ultra-high-performance sales, the rise in average selling prices and a stronger-than-expected Korean won/U.S. dollar exchange rate.
Sales jumped 20.2 percent last year to $2.1 billion, buoyed by 21-percent higher export sales, including 28.9-percent higher sales in North America and 66.5-percent growth by the firm's Chinese subsidiaries.
Kumho reported slightly higher operating income in the first quarter on 12-percent higher sales, fueled largely by increased domestic original equipment sales.
Overall sales-not counting results from its Nanjing Kumho Tire unit in China-grew to $417.5 million, as domestic OE sales climbed 20 percent, vs. 7.9 percent for domestic replacement and 4.1 percent for export.
The Seoul, South Korea-based firm's tire sales break down to 37 percent domestic and 63 percent export.
Pre-tax operating income grew 4.2 percent to $72.2 million while net income fell 41.4 percent to $16.6 million.
Of the firm's $247 million in export tire sales, 40.5 percent-or $100 million-were recorded in North America.
Kumho's first quarter results should translate into double-digit sales growth for the entire year, according to Korean stock analysts Dongwon Securities Co. Ltd.
Kumho reported operating and net income in fiscal 2004 of $137 million and $87.3 million on sales of $1.42 billion-not including results from its Chinese operations.
Toyo is forecasting double-digit growth in tire sales for fiscal 2006 after chalking up a 6.8-percent increase for the year ended March 31.
Osaka, Japan-based Toyo's tire business led the firm's financial results last year, reporting a 62.4-percent jump in operating earnings, to $103.2 million, as sales reached $1.62 billion, pushing the earnings/sales ratio up two full points to 6.4 percent.
On a corporate basis, Toyo reported 57.1- and 35.5-percent increases in operating and net income-to $112.3 million and $7 million, respectively-on 5.4-percent better sales of $2.51 billion.
For fiscal 2006, Toyo is forecasting a slight drop in earnings on the negative effects of rising raw materials costs and foreign exchange losses.
Tire division sales should grow 12.9 percent this year to more than $1.8 billion, although Toyo did not comment on reasons for its expectations.