Demystifying Tire Pricing "Q226: most indicators flashing green" Lesne

Research evidence excerpt

Demystifying Tire Pricing "Q226: most indicators flashing green" Lesne

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Demystifying Tire Pricing Equities

GlobalQ226: most indicators flashing green

Automobiles

David Lesne

Strong Q226 expected with some potential guidance upside risk Analyst

In an auto sector increasingly marked by profit warnings and accelerating restructuring david.lesne@ubs.com

efforts, the tire segment stands out as a relative bright spot. In the near term, we see +33-14-888 3034

potential upside risk to volume growth, supported by Europe replacement demand Patrick Hummel, CFA

(albeit helped by some pre-buy effects, we think) and China. This is combined with a Analyst

favourable channel mix (replacement strongly outperforming OE). On pricing, our UBS patrick.hummel@ubs.com

Evidence Lab database (> Access Dataset) shows retail prices are up c.+1–3% on +41-44-239 52 54

average in Q2 vs. Q1, providing reassurance around the sector’s ability to pass through Juan Perez-Carrascosa

inflationary pressures. Notably, premium tire manufacturers have reacted quickly, with Analyst

Michelin and Conti outperforming. Overall, this creates a supportive set-up into Q2/H1 juan-perez.carrascosa@ubs.com

results (see detailed preview in the note). Within the space, we see Continental as best +34-91-436 9025

positioned to either upgrade or narrow its FY guidance range in Tires. Nora Min

Analyst

H226: healthy pricing, (budget) volume shortages and RM tailwind returning? S1460518050001

nora.min@ubs.com

Should oil prices remain around current levels, we see scope for raw material tailwinds to

+86-21-3866 8905

emerge from Q426/Q127. This would coincide with fully implemented price increases