AKRON The tire industry experienced mixed results during the third quarter ended Sept. 30.
Hankook Tire Co. Inc. and Trelleborg Wheel Systems both enjoyed higher operating income with improved sales, while Titan International Inc.'s earnings plummeted despite higher sales and Group Michelin suffered lower sales during the period.
Hankook Tire Co. Inc. reported 9.9-percent improved operating income on marginally better sales.
Hankook attributed the improved earnings, to $219.6 million, to its expanding OE portfolio with European and Japanese car makers.
Revenue for the quarter increased 0.8 percent to $1.62 billion, resulting in an improved operating margin of 13.6 percent, a full percentage higher than a year ago.
Hankook did not disclose net earnings or any data related to regional performance.
Our expanding premium OE portfolio was the key attribute behind this quarter's solid business performance,..., said Hankook Vice Chairman and CEO Seung Hwa Suh.
Mr. Suh also noted that Hankook's ongoing investment programa new Indonesia plant, plans for a U.S. plant, and R&D expansions in Korearepresents a stronger springboard for growth....
Group Michelin is sticking by its earlier 2013 earnings forecast despite lower sales in the third quarter and a worsening currency effect and a negative price-mix ratio during the period.
Michelin's sales revenue fell 5.3 percent in the quarter to $6.92 billion despite a 2-percent rise in sales volumes. Michelin did not release earnings at this time, but said it expects to hit its fiscal 2013 goal of increasing its operating income for the year by about $200 million over 2012.
Sales for the nine months fell 5.3 percent to $20.7 billion.
To offset the impact of unfavorable exchange rates, Michelin said it is tightening its management of key levers, notably through enhanced control of gross margin and costs.
The volume increase coupled with a rise in the second quarter to offset a drop in the first quarter to put the firm on par with the first nine months of 2012, Michelin said.
Michelin said the price-mix effect was a negative 2.4 percent, reflecting stable replacement tire prices following targeted price repositionings for certain car and light-truck tire ranges, as well as raw-materials-related contractual adjustments.
By segment, Michelin reported sales drops of 3.3, 5.2 and 11.5 percent, respectively, in the passenger car/light truck, truck tire and specialty tire business units.
Titan International Inc.'s third-quarter net earnings plummeted 58.7 percent to $8.1 million despite a 22.9-percent surge in sales to $497.5 million, compared with the year-ago period.
Sales increased 35 percent from the addition of recently acquired entities, including $128.9 million at Titan Europe, Titan said, noting that overall sales volume was on par with last year.
The increase in net sales was partially offset by a price/mix reduction which resulted largely from decreased raw material prices that were generally passed on to customers. That, according to the Quincy-based company, lowered sales about 5 percent; weakened demand in the earthmoving/construction market, contributing to a 4-percent drop in sales volume; and unfavorable currency translation which decreased sales by about 3 percent.
For the first nine months, ended Sept. 30, Titan's net income fell 48.7 percent to $50.8 million while operating income fell 42.1 percent to $101.8 million as sales increased 25.8 percent to $1.67 billion.
The increase in year-to-date sales was offset by the price/mix reduction resulting largely from lower raw material prices passed on to customers, lowering sales about 7 percent, and an unfavorable currency translation which decrease sales 2 percent.
Some people will say the glass is half full; others say it's half empty. I see the future for Titan as the best I've ever seen. Why? We have many opportunities on the horizon, said Chairman and CEO Maurice Taylor, citing the company's new ag wheels and tires, new radial LSW tires and start-up of its Titan Tire Reclamation Corp. (TTRC) project to recycle mining tires.
The market in construction and mining tires has been soft the last few quarters and, with the lower cost of materials, tire prices will be dropping through the end of the year, he continued. The mining companies, I believe, will be dropping their tire inventory from 14 months to 6 months and then buying what they use going forward at lower prices. However, the smaller construction business should expand 20 to 25 percent in 2014 based on information from OEMs.
Mr. Taylor said that with Titan's new tire acquisition in Volgograd, Russia, the entire Titan team believes we can really expand the output of this facility. I agree, but like everything else, I believe it will take a little longer than what some of our team thinks. The plant has the technical talent. The question becomes how fast they execute the plan.
You can see why I believe the glass is half full and how we are going to grow.
In short, the agriculture market is still strong. Pricing is dropping due to lower cost materials. Our revenue should stay the same because our market share should grow.
He predicted the construction tire and wheel business should grow double digits in 2014 if the OEM forecasts stay where they predict. As Titan focuses on all the specialty wheels and tires, we should see improvement in margins.
Trelleborg Wheel Systems reported a 33-percent increase in operating income for the quarter ended Sept. 30 on 18.5-percent higher sales.
Trelleborg Wheel, a unit of the diversified Swedish polymer group Trelleborg A.B., attributed the earnings improvement to the effects of higher sales and efficient cost management, with the firm's acquisition of Maine Industrial Tire last year playing a key role.
Operating income rose to $18.4 million on sales of $159 million, for an operating margin of 11.5 percent, Trelleborg said. Exchange rate effects held down the scale of the improvement.
Looking ahead, the group cited the global launch of a range of solid specialty tires for construction, civil engineering, underground mining and waste management vehicles for optimism.
The unit posted operating income of $62.7 million for the nine-month period, an increase of 5.6 percent, and sales of $508.7 million, a 6.5-percent improvement.
The unit represents about 20 percent of parent Trelleborg's annual sales. The parent posted operating income of $112.2 million on sales of $835.6 million in the quarter, both improvements.