E-News Update
February 2010



Rubber Journal Asia

Banking on better growth this year
Most tyre companies, like Bridgestone, Goodyear and Michelin, reported declining sales and profits due to the weak automotive market and currency exchanges last year while carbon black suppliers Cabot and Yokohama reported better results, mainly due to lower raw material prices.

A bright spark came from US-based chemicals supplier Cabot that reported a net income of US$29 million in the first quarter of this year, compared to US$4 million in the same quarter last year. In fact, it had 24% higher sales in its rubber blacks business when compared to the same quarter last year.

Japanese Yokohama Rubber posted net income of 9 billion yen in the nine months in 2009, compared to 222 million yen in the same period of the previous fiscal year. The improvement in profitability occurred despite a 16.2% decline in net sales and reflected a downward trend in raw material prices, reductions in selling and other expenses and smaller losses on currency translation. Yokohama’s tyre business’ sales fell by 14.6%, mainly as a result of weak demand in Japan and the US despite sales gains in China and Russia.

Goodyear Tire & Rubber reported improved fourth quarter tyre sales and earnings last year and expects year-over-year global growth in 2010. The US company’s fourth quarter 2009 sales were US$4.4 billion, up 7% from 2008’s fourth quarter. Its annual sales for 2009 were US$16.3 billion, down from US$19.5 billion in 2008. The lower sales were primarily due to lower demand in the US and Europe as well as a US$924 million reduction in sales in other tyre-related businesses. Sales were negatively impacted by a lower mix of high-value commercial truck and OTR tyres due to ongoing weakness in these product segments. Last year, the company reduced its global workforce by 5,700, exceeding its full year target of 5,000, and it expects to continue to look closely at cost in 2010 at its goal of achieving gross savings of US$1 billion over the next three years.

French tyre maker Michelin reported EUR862 million in operating income before non-recurring items, compared with EUR920 million in 2008, reflecting the 14.8% decline in unit sales and the underutilisation of production capacity. Despite a high EUR412 million spent in restructuring costs, Michelin posted net income of EUR104 million, compared to EUR357 million last year. Sales declined by 9.8%.

Japanese Bridgestone’s profit dropped 90% in 2009 compared to 2008 but it expects to do better this year as a result of its cost cutting measures and respective governments’ push for automotive sales. It posted a net profit of 1.04 billion yen last year, compared with 10.41 billion yen in 2008. The strong yen pulled down operating profit by 44 billion yen and the company included a special loss of 10.6 billion yen as a result of shutting down production facilities in Australia and New Zealand. Sales declined by 20%. This year, it expects increased income from some high-margin products, such as its run-flat tyres, which can be driven even if damaged. It also forecasts continued demand for large and ultra-large OTR radial tyres used in construction and mining. With the brighter outlook for 2010, the company is predicting a net profit of 45 billion yen this year.


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