QUINCY, Ill. (Oct. 30, 2013) — Titan International Inc.'s third-quarter net earnings plummeted 58.7 percent to $8.1 million despite a 22.9-percent surge in sales to $497.5 million, compared with the year-ago period.
Sales increased 35 percent from the addition of recently acquired entities, including $128.9 million at Titan Europe, Titan said, noting that overall sales volume was on par with last year.
The increase in net sales was partially offset by a price/mix reduction which resulted largely from decreased raw material prices that were generally passed on to customers. That, according to the Quincy-based company, lowered sales about 5 percent; weakened demand in the earthmoving/construction market, contributing to a 4-percent drop in sales volume; and unfavorable currency translation which decreased sales by about 3 percent.
For the first nine months, ended Sept. 30, Titan's net income fell 48.7 percent to $50.8 million while operating income fell 42.1 percent to $101.8 million as sales increased 25.8 percent to $1.67 billion.
The increase in sales for the first nine months was offset by the price/mix reduction resulting largely from lower raw material prices passed on to customers, lowering sales about 7 percent, Titan said, and an unfavorable currency translation which decrease sales 2 percent.
"Some people will say the glass is half full; others say it's half empty. I see the future for Titan as the best I've ever seen. Why? We have many opportunities on the horizon," said Chairman and CEO Maurice Taylor, citing the company's new ag wheels and tires, new radial LSW tires and start-up of its Titan Tire Reclamation Corp. (TTRC) project to recycle mining tires.
"The market in construction and mining tires has been soft the last few quarters and, with the lower cost of materials, tire prices will be dropping through the end of the year," he continued. "The mining companies, I believe, will be dropping their tire inventory from 14 months to 6 months and then buying what they use going forward at lower prices. However, the smaller construction business should expand 20 to 25 percent in 2014 based on information from OEMs."
Mr. Taylor said that with Titan's "new tire acquisition in Volgograd, Russia, the entire Titan team believes we can really expand the output of this facility. I agree, but like everything else, I believe it will take a little longer than what some of our team thinks. The plant has the technical talent. The question becomes how fast they execute the plan.
"You can see why I believe the glass is half full and how we are going to grow.
"In short, the agriculture market is still strong. Pricing is dropping due to lower cost materials. Our revenue should stay the same because our market share should grow."
He predicted the "construction tire and wheel business should grow double digits in 2014 if the OEM forecasts stay where they predict. As Titan focuses on all the specialty wheels and tires, we should see improvement in margins."