Michelin retains top spot in tire sales

Statistically speaking, 2020 will be the "asterisk" year — or the proverbial bump in the road — in terms of tracking industrial progress.

As the COVID-19 pandemic swept across the globe and economies ground to a halt in response, economic forecasts turned bleak almost overnight.

A year later, in hindsight, some sectors — the tire industry among them — fared remarkably well, considering what might have been.

• This story originally ran in the Aug. 30, 2021, print edition of Tire Business. Subscribers may download the digital edition here.

As would have been expected, tire makers by and large suffered sales declines last year. Tire-related revenue by the Top 75 tire makers globally fell 8.2% in 2020 from 2019 to an estimated $159 billion, the lowest sum since 2016.

Among the leading 25 companies that Tire Business tracks, 20 reported drops in revenue last year, including a dozen with double-digit declines. Collectively, the drop was 11%.

While earnings fell pretty much across the board, around the globe, the drop was not a precipitous as one might have imagined.

The average operating income/sales revenue margin among 25 leading tire makers last year was 7.7%, down nearly three points from fiscal 2019. That's a manageable decline considering the dire financial projections most companies issued after the first half of the year.

Two of the 25 companies tracked for this report reported operating losses last year, but that was offset by seven others that reported improved income for the year.

After factoring all the disruption into the equation, the league of top tire makers remained relatively stable, with but a few notable exceptions.

Group Michelin retained the top spot on the Tire Business Top 75 with fiscal 2020 tire-related revenue of $22.9 billion, staying comfortably ahead of No. 2 Bridgestone Corp. Both companies reported tire business-related sales declines of roughly 15% during fiscal 2020.

Goodyear, Continental A.G. and Sumitomo Rubber Industries Ltd. retained the third through fifth positions on the Top 75, ahead of Hankook Tire & Technology Co. Ltd., which moved past Pirelli & C. S.p.A. for the No. 6 slot in large part due to limiting the sales drop to single digits, while Pirelli suffered a 19% decline in sales.

Yokohama Rubber Co. Ltd. retained its No. 8 position, while China's Zhongce Rubber Group Co. Ltd. slipped into the No. 9 spot ahead of Taiwan's Cheng Shin Rubber Industry Co. Ltd./Maxxis International.

There was no significant merger/acquisition activity among the leading tire makers in 2020, but that changed earlier this year with Goodyear's takeover of Cooper Tire & Rubber Co.

The companies' combined revenue should approach or exceed $17 billion in fiscal 2021, based on the seven months of Cooper's business that will be incorporated into Goodyear's financials this year. Goodyear's $2.5 billion cash-and-stock deal for Findlay, Ohio-based Cooper closed June 7.

The deal won't change Goodyear's No. 3 standing in the Global Top 75 rankings, but it will put Goodyear on more equal footing in North America with its major rivals Bridgestone and Michelin, with each generating more than $9 billion in revenue in the region.

For the annual Top 75 ranking, Tire Business rates the tire makers on their revenue from the sale of tires they have 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.

• For subscribers, see the full Top 75 rankings by downloading the digital edition here.

Besides being No. 1 worldwide in tire sales revenue, Michelin is the clear sales leader in Europe, where Bridgestone is No. 3 behind Continental A.G., according to Tire Business' analysis of the major companies' regional sales breakdowns.
Bridgestone remains the No. 1 tire company in Asia — its "home" market — as well as in North America.

Michelin appears to be the most well-balanced, with its sales spread more equally among the three major regions — Americas, Asia/Pacific and Europe — than its major competitors.

The analysis also shows how important North America is to multiple non-U.S.-based companies, including Bridgestone, which derives roughly 43% of its global tire business revenue there.

With its acquisition of Cooper, Goodyear will become much more North America-centric, with 55% or more of its global revenue from the region.

Other major tire makers that rely heavily on North America for their sales revenue include Toyo Tire Corp., which derives nearly 60% its tire unit from business in North America, while Hankook Tire and Nexen Tire generate nearly a third of their revenue there.

New to the rankings this year is a quintet of Chinese companies, although three of them — Shandong Changfeng Tire Co. Ltd. (No. 32); Shandong Yongfeng Tire Co. Ltd. (No. 47); and Shandong Mirage Tyres Co. Ltd. (No. 59) — previously were reported under Shandong Hengfeng Tire Co. Ltd., but now operate independently.

A fourth new company — Shandong Jinyu Tire Co. Ltd. — was included in the results of Sailun Group for several years before that partnership "demerged" in 2019.

Shandong Jinyu since has opened a plant in Vietnam and established a U.S. sales company to handle the firm's Amulet truck tire brand. It debuts at No. 49 with sales of $510.5 million.

The other new company is Dongying Fangxing Rubber Co. Ltd., which debuts at No. 46 with sales of $610 million. It is a producer of passenger, truck and OTR tires based in Guangrao County, Dongying, Shandong. In business since 1998, the company goes to market with the Autostone, Hong Ying and Opal brands.

Thirty-one of the companies in the top 75 are from China, including three among the top 20 — Zhongce Rubber Group Co. Ltd. (No. 9), Linglong Group Co. Ltd. (No. 13) and Sailun Group Co. Ltd. (No. 17).

Other countries represented in the ranking are: India (seven 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, 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.

Collectively, the top 10 tire companies accounted for 61% of the world's tire sales last year, based on Tire Business' numbers — down two percentage points from the 2020 ranking.

All of the companies that provided financial data to Tire Business were in the black on an operating income basis in 2020 versus 2019, although half of them reported lower earnings.

Finland's Nokian Tyres P.L.C., India's Balkrishna Industries Ltd. and Pirelli & C. S.p.A. all reported operating ratios of greater than 20%.

On a net income basis, the industry's larger players fared worse.

The average net income ratio for the group was 0.3%, a nearly three-point drop from 2019, as six companies — Bridgestone, Continental, Goodyear, Kumho Tire Co. Inc., Nexen Tire Corp. and Titan Tire Corp. — reported net losses in fiscal 2019 and five others reported lower net earnings.

The average sales per employee for the 24 publicly traded companies that provided employment data was $191,832, down $20 from the 2020 figure.

Kumho Tire Co. Inc. had the highest sales per employee at $401,111, ahead of Nokian Tyres P.L.C. at $330,032; Toyo Tire Corp. at $284,973; and Hankook Tires at $273,650.