AKRON—The second quarter, ended June 30, presented significant challenges to most of the seven publicly held, tire-industry-related companies that recently reported results for the period. Only Cooper Tire & Rubber Co. and Carlisle Companies Inc. reported unmitigatedly positive results, posting record earnings for the period.
Titan International Inc., plagued by strikes and a slumping U.S. farm economy, fared the worst, though it considered finishing in the black a victory of sorts.
Individual company results follow.
Arkansas Best Corp.
Arkansas Best Corp., parent of Treadco Inc., saw its net income for the second quarter jump 49.9 percent to a record $11.1 million on a 3.3-percent increase in revenue to $418.9 million.
The Fort Smith, Ark.-based trucking company reacquired a 100-percent interest in Treadco, a commercial dealership and retreader, June 10, at which time Treadco's stock was delisted from trading on the Nasdaq exchange.
For its part, Treadco posted second-quarter revenue of $46.7 million, down 0.9 percent from the 1998 quarter. The unit's operating income plunged 67.2 percent to $493,000, which it attributed to lower-than-expected demand, due in part to unusually mild weather, and to intense competition within the retread industry.
Treadco's operating income for the first half of 1999 plummeted 74.3 percent to $238,000, despite a 3.6-percent increase in revenue to $87.6 million.
Arkansas Best reported a 62.5-percent leap in net income for the first half, to $17.9 million, as revenue rose 3.9 percent to $813.3 million.
Bandag Inc. attributed a 13.8-percent rise in net earnings for the second quarter to progress in controlling operating expenses.
The Muscatine, Iowa-based retreading supplier posted net earnings of $16.1 million for the three months, despite a 5.3-percent drop in sales to $252.1 million.
Chairman and CEO Martin G. Carver said Bandag's tread rubber unit volume was down about 6 percent worldwide. He went on to comment about changes in the company's distribution base caused by the loss of dealers who have switched to competing retread systems.
``Near-term, such separations are impacting our sales volume,'' Mr. Carver said. ``Going forward, however, we anticipate existing Bandag dealers, plus some new, strategically located distributors, will be working to recapture this business.''
The company also expects its fleet tire management unit, Tire Management Solutions Inc., which began full operations during the quarter, to contribute increased revenues.
Within Bandag's commercial dealership subsidiary, Tire Distribution Systems Inc. (TDS), second-quarter operating earnings plunged 59.1 percent to $842,000, though sales grew 1 percent to $97.6 million.
For the six months, TDS lost $1.05 million, compared with net income of $1.0 million in the first half of 1998, while sales rose 3.4 percent to $182.2 million.
Bandag's overall net income climbed 12.2 percent in the first half to $26.2 million, despite a 5.1-percent drop in sales to $476.3 million.
Significant gains at its Carlisle Tire and Wheel subsidiary helped Carlisle Companies Inc. to record earnings for the second quarter.
Carlisle, a diversified manufacturer based in Syracuse, N.Y., posted a 14.0-percent increase in net earnings for the period, to $28.0 million, on a 7.6-percent improvement in net sales to $425.8 million.
Results for Carlisle Tire and wheel were not broken out, but Carlisle said the unit had the highest earnings gains of all its business units in the first half.
Overall, the company's earnings grew 14.4 percent in the six months, to $49.8 million, on a 7.5-percent increase in sales to $815.8 million.
Cooper Tire & Rubber
A 9-percent rise in tire unit sales helped Cooper Tire & Rubber Co. achieve record sales and earnings for the second quarter.
Cooper achieved net income of $38.0 million for the period, a 17.4-percent jump from 1998, on sales growth of 7.3 percent to $495.6 million.
Chairman and CEO Patrick W. Rooney said the company's share of the U.S. market for replacement passenger and light truck tires grew nearly a full percentage point, compared with the 1998 quarter.
For the first half, Cooper's sales rose 7.1 percent to $963.2 million—nearly 75 percent from tires—while net income climbed 17.8 percent to $69.3 million.
As expected, Goodyear's net income for the second quarter plunged 67 percent to $65.7 million, due in large measure to efforts to reduce inventories and realign production capacity in advance of the impending alliance with Sumitomo Rubber Industries Ltd., as well as weak economies in emerging markets in Europe and Latin America.
Though sharply lower, Goodyear's earnings fell within the $64 million-$80 million range the company had forecast in late June, albeit at the low end.
Net sales for the three months slipped 2.8 percent to $3.05 billion.
Within the company's North American Tire business segment, competitive pricing and a less-profitable product mix, resulting from inventory reduction efforts, sent operating income tumbling 64.9 percent to $24.3 million, though sales rose 1.9 percent to $1.58 billion on 7.9-percent higher unit volume.
For the first half, segment operating income fell 41.8 percent to $116 million, while sales edged up 0.4 percent to $3.07 billion.
Overall, Goodyear's first-half earning plummeted 75.7 percent to $91.2 million, as sales skidded 3.1 percent to $6.04 billion.
Chairman and CEO Samir G. Gibara said the company's results should return to 1998 levels by the fourth quarter, if economies in Latin America stabilize.
Contending with ongoing strikes by the United Steelworkers union at two of its tire plants and a depressed U.S. farm economy, Titan International Inc. finished in the black for the second consecutive quarter, though it lagged far behind 1998 levels.
The Quincy, Ill.-based tire and wheel maker posted net income of $265,000 for the second quarter, up from $128,000 in the first quarter, but 94.4 percent lower than the $4.77 million it earned in the second quarter of 1998.
Still, it represents a marked improvement over the last quarter of 1998, during which Titan lost $5.34 million.
Sales for the just completed quarter slid 12.2 percent to $159.0 million.
To counter the production losses caused by strikes that began last year at its Des Moines, Iowa, and Natchez, Miss., tire plants, Titan has hired and trained replacement workers and retrained non-union workers and is closing in on pre-strike capacity, said President and CEO Maurice Taylor Jr.
The Natchez plant already has returned to profitability, the company said, while the Des Moines facility is approaching profitable levels.
In addition to its labor challenges, Titan said it also has had to contend with a 30-percent drop in sales of agricultural equipment over the past year, which has led to extended shutdowns of facilities at several of Titan's large original equipment tire/wheel customers.
Through the first six months of 1999, Titan's sales skidded 13.8 percent to $317.7 million, as net income plummeted 97 percent to $393,000.
A 10.2-percent increase in unit shipments of tires helped Memphis, Tenn.-based TBC Corp. achieve a 15.9-percent jump in second-quarter sales to a record $187.7 million.
The company would have achieved record net income as well, had it not been for a special after-tax charge of $2.8 million, related to the write-off of a note receivable from a former distributor.
Without that charge, TBC's net income for the three months would have leapt 37.4 percent to $5.11 million. With it, however, net earning slumped 37.9 percent to $2.31 million.
For the first half, sales grew 15.6 percent to $349.9 million, though the special charge sent earnings down 11.0 percent to $6.12 million. Without the charge, earnings would have climbed 29.8 percent to $8.92 million.
TBC Vice Chairman and CEO Louis S. DiPasqua said the company has ``an aggressive longer-term plan'' for growing its Big O chain of retail tire stores, which numbered 439 as of June 30. He called the Big O stores the most dynamic of TBC's various distribution channels.