Why the National Tyre (ASX:NTD) share price is surging up today

National Tyre share price has rocketed up today after the company announced strong trading and a positive FY21 forecast.
The post Why the National Tyre (ASX:NTD) share price is surging up today appeared first on Motley Fool Australia. –

tyres and wheels bouncing about, indicating a positive share price

National Tyre & Wheel Ltd (ASX: NTD) shares rocketed up after the company reported that its trading for the first four months of FY21 had exceeded expectations. The update at today’s annual general meeting (AGM) sent the National Tyre share price up by almost 15% to 86 cents in early trade. Shares are now trading at 85 cents, up 13.33%. 

Highlights from the AGM

National Tyre advised that earnings before interest, tax, depreciation and ammortisation (EBITDA) for the half year to 31 December 2020 is now expected to range between $11.5 million and $12.5 million.

The company said it expected the strong performance to continue in the second-half of FY21.

National Tyre shareholders were told that the tyre industry was proving resilient, despite COVID-19-related challenges. However, Asian suppliers have advised that import prices will rise by 1% to 3% over the coming months.

National Tyre also pointed to several short term tailwinds facing the company. These include adverse agricultural conditions, weak truck movements across the country, and the still-depressed domestic travel industry. The company said that consumer demand remained difficult to predict amid the uncertainty surrounding the pandemic.

A quick take on National Tyre

National Tyre distributes motor vehicle tyres, wheels, tubes and related products. It focuses on tyres and wheels that fit passenger cars, SUVs 4WDs, light commercial vehicles, caravans and trailers.

In FY20, the company generated annual revenue of $158.9 million. This activity was converted to an operating EBITDA of $11.8 million. National Tyre acquired Tyres4U in August 2020, and this acquisition has enabled it to further expanded its diverse range of businesses.

At the height of Australia’s pandemic-induced restrictions, the company says its lower-budget tyre and wheel businesses operated at or above forecast levels. In fact, some of its business divisions broke monthly revenue and profit records during the fourth quarter of FY20.

How the National Tyre share price performed in 2020

The National Tyre share price has been unstoppable this year, gaining more than 90% as people used private cars more and changed their travel habits in the midst of long-distance travel restrictions. The National Tyre share price is trading at 85 cents giving the company a market cap of $85 million.

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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the National Tyre (ASX:NTD) share price is surging up today appeared first on Motley Fool Australia.

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