AKRON-Sluggish tire sales in North America teamed with high raw materials costs hampered the bottom line of a number of companies in the tire industry. Nonetheless, Goodyear continued its global diversification, seeing its 1995 sales and net income reach record levels, and fourth quarter income rise, as well.
However, TBC Corp.-one of the nation's largest marketers and distributors of automotive replace-ment market products-reported drops in net income for the fourth quarter and year, as did retreader Treadco Inc.
For the year, Akron-based Goodyear's 1995 sales grew 7.1 percent to a record $13.17 billion, from $12.29 billion in 1994. Net income for 1995 was $611 million, a rise of 7.8 percent from $567 million the previous year.
Fourth-quarter sales were $3.27 billion compared to $3.21 billion for the same 1994 period; net in-come rose 7.2 percent to $146.4 million from $136.5 million.
The company said the record sales figures reflect higher average tire selling prices and the favorable effects of foreign currency translations. According to President and CEO Samir F. Gibara, the tire maker's strategic focus on global diversification and productivity is beginning to pay off.
Goodyear, he said, ``is making progress toward the goal of increasing its international presence in order to become less cyclical and enhance its opportunities for growth.''
Also contributing to Goodyear's strong 1995 results were its European and oil transportation operations, he added. Operating income for the oil business grew by 19.8 percent for the quarter on a 50-percent increase in sales.
Dramatically increased raw material costs posed ``enormous challenges'' to the company, Mr. Gibara said, with that and labor costs adversely affecting Goodyear's margins somewhat in 1995.
The company reported fourth-quarter sales in the U.S. hit $1.75 billion compared to $1.78 billion for the final period of 1994. Sales for 1995 increased to $7.25 billion from $7.13 billion in 1994.
The firm's U.S. operating income for the final quarter was $116 million vs. $125 million in the same 1994 period. For 1995, its U.S. results dropped, from $591.5 million in 1994 to $543.9 million last year.
Goodyear also reported that its European sales for the fourth quarter rose 17.5 percent, and 25.2 percent for the year, with operating income soaring 56.4 percent for the quarter, and 49.6 percent in 1995.
Sales in Latin America rose for the quarter and year; fourth- quarter operating income was flat and dropped for the year, reflecting weak economic conditions in Brazil, the company said.
Memphis, Tenn.-based TBC reported its net income for the three months ended last Dec. 31 totaled $3.1 million, a drop of 40.3 percent from $5.2 million for the same 1994 quarter. Net sales for the fourth quarter were $126.4 million compared with $127.7 million in the year-earlier period.
For 1995, TBC's net income sank 22 percent, to $15.2 million from $19.5 million the previous year. Net sales for the year were down almost 3 percent to $536.1 million, compared to 1994.
TBC's annual results, commented President and CEO Louis S. DiPasqua, ``mirror the industry-wide reports of a general softness in the replacement tire market during the year. This same trend was apparent in the broader automotive aftermarket, which was comparing against a relatively strong year.''
Affecting TBC's performance last year, he said, was a 6.5-percent decline in unit shipments of tires, although ``initial indications encourage us about the prospect for a rebound in demand during 1996.''
Because registered vehicles in the U.S. have reached an all-time high of more than 190 million, and the number of miles driven is expected to approach a record 2.0 trillion this year, Mr. DiPasqua believes service and sales opportunities will rise.
``Independent tire dealers remain the dominant source for replacement tires and under-car repairs,'' he said, ``and the TBC distribution network continues to be the leader in serving this important industry segment.''
With its litigation with Bandag Inc. dragging on, Treadco's financial report was a roller coaster ride of ups and downs.
The Fort Smith, Ark.-based retreader had a slight increase of 0.6 percent in fourth-quarter sales to $35.3 million for the period ended Dec. 31, compared to $35.1 million for the same 1994 quarter. Sales from retreading for the 1995 fourth quarter fell 1.2 percent to $18.9 million, while sales of new tires in the same period were up 2.6 percent to $16.4 million.
For the quarter, the company saw an operating loss of $490,000 with a negative operating margin of 1.4 percent compared to operating income of $3.2 million and an operating margin of 9.3 percent for the same quarter in 1994.
The company said the operating loss included an $840,000 charge for costs of equipment removal to be incurred at its 26 Bandag Inc. franchise locations.
The net income loss for the fourth quarter last year was $416,000 compared to net income of $1.9 million for the year-earlier period.
Treadco reported sales of $147.9 million for 1995, an increase of 5.1 percent over $140.7 million for the previous year. Sales from retreading grew by 2.7 percent to $79.2 million compared to $77.1 million during 1994.
Sales of new tires for the year were up 8.1 percent to $68.7 mil-lion. Operating income was $4.5 million with an operating profit margin of 3.1 percent for 1995 compared to $11.1 million and 7.9 percent, respectively, for 1994. Net income dropped by 63 percent to $2.4 million for 1995 compared to $6.5 million for 1994.
John R. Meyers, Treadco's president and CEO, blamed the company's poor performance on ``the combination of Bandag's repeated price increases of raw materials during the past 24 months, lack of flexibility in allowing (Treadco) to expand, and the notice of nonrenewal of eight of the company's Bandag franchise locations.''
That hindered the company's ability to expand and compete in the retread truck tire market, he continued, requiring it to seek alternative suppliers of retread equipment and raw materials.
But once its Bandag franchises are converted to Oliver Rubber Co.-licensed facilities, and the addition of Bridgestone/Firestone Inc.'s Oncor mold-cure process is completed, Mr. Meyers said Treadco ``will be in a better position to compete in the retread truck tire market and expand when and where it is most beneficial.''