Global Tire Report: Michelin takes over No. 1 spot in rankings

AKRON — With a few notable exceptions, fiscal 2019 was a flat to down year for most of the world's leading tire makers.

One of those exceptions, however, was Group Michelin, whose sales improved by nearly 10%, helping push the French company to the top rung of Tire Business' annual ranking of tire makers, ending Bridgestone Corp.'s run of 11 straight years as No. 1.

Michelin's sales jump was aided measurably by a pair of acquisitions — the $1.45 billion buyout of off-road tire specialist Camso in mid-2018 and the $545 million takeover of Indonesian tire maker P.T. Multistrada Arah Sarana TBK in early 2019.

• This article appears in the Aug. 31 print edition of Tire Business, as part of the annual Global Tire Report.

Tire Business calculates Michelin's tire manufacturing-related revenue in 2019 at $25 billion, sufficient to edge past Bridgestone, which is a solid No. 2 at $24.3 billion.

For the annual Top 75 Ranking, Tire Business rates the tire makers on their revenue from the sale of tires they've manufactured in order to achieve a more equitable "apples-to-apples" comparison.

Excluded are items such as third-party sales of steel cord, synthetic rubber or carbon black, as well as estimates for non-tire items such as auto-service-related revenue at company-owned retail stores.

Bridgestone, Michelin, Goodyear and Continental, for example, report hundreds of millions or even billions of dollars in revenue from their respective captive retail networks, which generate measurable shares of their revenue from automotive-service-related activities and sales of tire brands other than their own.

Michelin said in 2018 that combining the Camso business with its own OTR tire assets would create an "OTR mobility solutions" business, with 26 plants, roughly 12,000 employees and annual sales exceeding $2 billion.

Bridgestone noted in its annual report that it experienced lower sales in 2019 in all of its major regional markets in both its consumer and commercial tire segments, while business in specialty tires was on par with fiscal 2018.

In its annual report, Michelin attributed its increased sales to the consolidation of the Camso and Multistrada acquisitions as well as to improved price/mix and favorable currency-exchange factors. Tire volumes actually decreased.

Goodyear remained a solid No. 3 in the rankings at $13.7 billion, but the gap between Goodyear and No. 4 Continental A.G. narrowed for a second straight year, based on a 4.7% drop in sales by Goodyear and a 1% increase by Continental's tire business.

Bridgestone's position near the top of the ranking is solidified by a minority 43.6% ownership stake it holds in Turkey's BRISA/Bridgestone-Sabanci Tire Mfg. (No. 40 with 2019 sales of $626 million). It also holds a 3% stake in Finland's Nokian Tyres P.L.C.

The next four spots in the ranking remained unchanged: Japan's Sumitomo Rubber Industries Ltd. retained the No. 5 spot ahead of Pirelli & C. S.p.A., Hankook Tire Co. Ltd. and Yokohama Rubber Co. Ltd.

Singapore-headquartered Giti Tire Pte. Ltd. slipped back ahead of Japan's Toyo Tire Corp. into 11th and China's Linglong Group Co. Ltd. advanced three spots to 14th on its own stronger sales and slight sales declines by Apollo Tyres Ltd. and MRF Ltd. of India.

New to the rankings this year are:

• Sun Tire & Wheel Systems, the Chennai, India-based producer of predominantly solid industrial tires under the Numa, Talon, Sunbear and Solo brands, debuting at No. 24 with fiscal 2019 sales of $1.2 billion.
• Shandong Cocrea Tyre Co. Ltd., a Linyi City, Shandong-based company that goes to market under the Allround, Befriend and Cocrea brands. It reported sales of $250.3 million last year, good for No. 59 on the list.
• Hung-A Co. Ltd., a Yangsan, South Korea-based producer of pneumatic and solid industrial tires, whose 2019 sales of $147.3 million earned it the No. 70 spot on this year's ranking.
• Ozka Lastik ve Kaucuk Sanayi Ticaraet A.s., the Cocaeli, Turkey-based producer of agricultural and other off-road tires. It debuts at No. 72 with sales of $121 million.

In addition, two firms from Iran — Barez Tire Group of Tehran and Artawheel Tyre Co. of Ardebil — returned to the Top 75 ranking after a few years' absence. Barez appears at No. 46 with sales of $541.2 million and Artawheel at No. 58 with sales of $286 million.

Also, Jiangsu General Science Technology Co. Ltd., the Jiangsu, China-based tire maker that goes to market in North America with the TBB brand, appears in the Top 75 ranking for the first time under that name. Previously it was listed as Jiangshu Tongyong Co. Ltd.

Exiting the Top 75 were Birla Tyres Ltd. of India, Dunlop Aircraft Tyres Ltd. of the United Kingdom and General Tyre & Rubber Co. of Pakistan Ltd., because they were eclipsed by other companies with greater sales, and P.T. Multistrada due to its acquisition by Michelin.

Twenty-eight of the companies in the Top 75 are from China, including four among the top 20 — Zhongce Rubber Group Co. Ltd. (No. 10), Linglong Group Co. Ltd. (No. 14), Sailun Jinyu Tyre Co. Ltd. (No. 17), and Shandong Hengfeng Tyre Co. Ltd. (No. 20).

Other countries represented in the ranking are: India (six companies); Taiwan and the U.S. (five each); Japan and South Korea (four each); Italy and Turkey (three each); Iran, Russia, Thailand and Vietnam (two each); and one each based in Argentina, Belarus, Finland, France, Germany; Indonesia, Netherlands, Pakistan and Singapore.

Thirteen of the 24 publicly traded companies outlined in this report suffered tire business sales declines in 2019 versus 2018, while two companies — Turkey's Brisa/Bridgestone (18.7%) and Petlas Tyre Industry & Trade (17.2%) — recorded double-digit growth.

Taiwan's Cheng Shin Rubber Industry Co. Ltd./Maxxis International regained the No. 9 spot with marginal sales growth and a dip in sales by China's Zhongce Rubber Group Co. Ltd.

Michelin's takeover of Cikarang, Indonesia-based Multistrada — which goes to market with the Achilles brand — provides the French tire maker with more than 180,000 metric tons of annual production capacity and strengthens its presence in the fast-growing Indonesian/Asian market.

While Michelin is considered No. 1 worldwide in tire sales revenue, Bridgestone remains the No. 1 tire company in Asia — its "home" market — and North America, while Michelin has the clear lead in Europe, where Bridgestone is No. 3 behind Continental A.G.

An analysis of the leading tire companies' sales data shows Michelin to be the most well balanced, with its sales spread more equally among the three major regions — Americas, Asia/Pacific and Europe.

That analysis also shows how important North America is to multiple non-U.S.-based companies, including Bridgestone, which derives nearly 45% of its global tire business revenue there, nearly on par with Goodyear.

The research also shows, for instance, that Toyo Tire Corp. derives more than half of its tire business sales from business in North America, while Hankook Tire and Nexen Tire generate nearly a third of their revenue there.

Overall, the estimated value of the world tire industry's sales was $166.6 billion, down 1.3% versus 2018.

Collectively, the top 10 tire companies accounted for nearly 63% of the world's tire sales last year — on par with the 2019 ranking.

The average operating earnings ratio among the 24 publicly traded companies that Tire Business monitors for this report was 10.6%, up nearly a full point from the 9.9% recorded in 2018, reversing two years of decline.

Sixteen of the 24 companies reported lower operating income in 2019 versus 2018 with two firms — Kumho Tire Co. Inc. and Titan International Inc. — in the red on an operating basis.

Italy's Pirelli & C. S.p.A., India's Balkrishna Industries Ltd. and Finland's Nokian Tyres P.L.C. were the most profitable, percentage-wise, with 24.6%, 23.5% and 19.8% operating ratios, respectively, research shows. 

The average net income ratio for the group of 24 was 3.1%, a three-point drop from 2018, as five companies — Continental, Goodyear, Trelleborg A.B., Kumho Tire and Titan — reported net losses in fiscal 2019 and six others reported lower net earning.

The average sales per employee for the 24 publicly traded companies that provided employment data was $211,573, down just a few dollars from the 2018 figure.

Kumho Tire had the highest sales per employee at $429,871, ahead of Nokian Tyres at $368682; Cooper Tire at $315,665; and Nexen Tire at $293,956.