AKRON-The economic slowdown and intense price competition continued to challenge tire and industry-related companies in the year's second quarter with most firms posting lower sales and profits.
TBC Corp. was the lone exception, reporting record sales and earnings.
Goodyear, meanwhile, returned to the black following two quarters in the red, while Cooper Tire & Rubber Co. and Myers Industries Inc. all posted sales and earnings declines. Titan International Inc. finished the quarter with a net loss and lower sales.
Goodyear reported net earnings of $7.8 million in the quarter, down nearly 90 percent from a year ago, but a marked recovery from a $46.7 million loss in the first quarter of 2001.
To compensate for lower demand, Goodyear reduced production around the world by 6 million units in the quarter, compared with the 2000 period, and will make further curtailments in the third quarter, Goodyear Chairman and CEO Samir Gibara said. The majority of the cutbacks will take place in North America and Europe.
Mr. Gibara cited the ``ongoing slowdown in the auto and commercial truck industries around the globe'' for the company's lackluster performance, saying the reduced demand led to a corresponding effort to adjust production and inventory levels. The company also blamed foreign currency exchange changes for a drop of about $30 million in quarterly operating earnings.
Net sales in the quarter were $3.58 billion, down less than 1 percent from the same period last year.
Through June, the Akron-based tire maker posted a loss of $38.9 million vs. earnings of $125.3 million in 2000. Sales dropped 3.8 percent for the half-year to $7 billion from $7.27 billion last year.
In North America, tire sales were up 4 percent, due in large part to a million units Goodyear shipped as replacements for the Firestone Wilderness AT tires Ford Motor Co. is replacing on its Explorer sport utility vehicle and Ranger pick-up trucks. Overall, the company shipped 28.9 million units in the period, on par with the 2000 second quarter; first half shipments of 54.7 million units were down 4.6 percent.
North American Tire operating income fell 43.1 percent, to $49 million, for the quarter, and was down 52.8 percent for the six months, to $64.4 million. Sales in the North American Tire unit grew 4 percent to $1.83 billion in the quarter, but declined 1 percent to $3.45 billion in the first six months of the year.
Goodyear's earnings equated to 5 cents a share, about on par with analysts' projections. Analysts expect the tire maker to earn 26 cents per share in the third quarter and 36 cents per share in the fourth quarter, according to a consensus report.
Meanwhile, the Goodyear brand gained 3 percentage points of car and light truck replacement market share in North America in the second quarter, Mr. Gibara said. The company benefited from a continuing shift in consumer preference for name brand tires and Ford Motor Co.'s recall/replacement of 13 million Firestone Wilderness tires, he said.
Even discounting a million units Goodyear shipped as part of the Ford program, Goodyear improved its market share, Mr. Gibara told financial analysts in a conference call July 23. Through the end of June, Ford had replaced 2 million tires, giving Goodyear a 50-percent share of the initial replacement shipments.
Overall, shipments of Goodyear flag brands-Goodyear, Dunlop and Kelly-were up 10 percent during the quarter, while shipments of tires to private brand customers declined, Mr. Gibara said. The overall car and light truck tire replacement market grew by about 1 percent, Goodyear said.
In the commercial tire market, Goodyear's shipments of truck and bus tires were lower than a year ago, but when compared with the market-replacement shipments down 8 percent and original equipment shipments off 41 percent-Goodyear picked up 2 percentage points of market share, Mr. Gibara said.
Cooper Tire & Rubber Co.
Cooper Tire & Rubber Co. reported double-digit declines in net earnings for the second quarter and first half of 2001, but management is confident earnings will be ``significantly stronger'' in the second half based on improved pricing and a rebound in demand.
Second quarter net income fell 48.3 percent to $18.3 million as sales declined 6.5 percent to $829 million. For the six months ended June 30, earnings plunged 67 percent to $22 million and sales slid 12 percent to $1.59 billion.
Cooper's Tire Business Staff Reported sales growth of 6 percent in the quarter, to $433 million, as sales of the Cooper and Mastercraft brands surged 20 percent and 30 percent, respectively. Overall, unit sales were up 3 percent, Findlay, Ohio-based Cooper said, or more than double the industry average.
Tire group operating profits fell 35.7 percent, despite $10 million in improvements related to pricing and product mix, Cooper said. Offsetting these gains were higher marginal production costs as the company attempted to reduce excess inventory and product liability expenses and litigation costs related to class action lawsuits.
These actions reduced operating profit by approximately $16 million and $13 million, respectively.
``Although our sales results are down from last year's record volume, this quarter was certainly a solid step in the right direction for Cooper,'' said Thomas A. Dattilo, chairman, president and CEO, in a prepared statement.
Myers Industries Inc.
Akron-based Myers Industries Inc., parent of Myers Tire Supply and Patch Rubber Co., saw its net income tumble 60.5 percent in the second quarter and 31.9 percent for the first half of fiscal 2001, as the company suffered the effects of the slumping automotive, recreational vehicle and truck markets.
Citing increased price competition in its major markets, Myers does not expect to report a ``significant'' recovery before year-end, according to Stephen E. Myers, president and CEO.
Net profits fell to $3.2 million in the quarter from $8.1 million in the 2000 period. Sales declined 8.1 percent to $152.7 million. For the first half, net income slid to $11.1 million while sales slipped 3 percent to $318 million.
Myers said sales in its distribution segment were down 1 percent for the quarter and 4 percent for the six months compared with last year. Sales in the firm's manufacturing segments were off 14 percent for the quarter and 6 percent for the half year, excluding the effects of acquisitions, the company said.
``The economic slowdown weakened business throughout our markets in North America and Europe during the quarter,'' Mr. Myers said. ``In addition to lower sales volume, market conditions have created stronger, price-based competition which has penalized our profitability.''
Titan International Inc.
Titan International Inc. reported a net loss of $4 million in the second quarter and $3.8 million for the first half. This compares with second-quarter income of $18.9 million and $19.9 million for last year's first half.
The Quincy, Ill.-based tire maker said sales during the most recent quarter fell 17.3 percent to $120.4 million. Six-month sales declined by a like amount to $256.4 million from the same period in 2000.
Last year's second-quarter results included a $38.7 million pre-tax gain resulting from the company's sale of manufacturing facilities in Clinton, Tenn., and Slinger, Wis.
Pro forma sales for the 2000 quarter and six months would have been $138.8 million and $279.3 million respectively, if adjusted for the sale of those assets, Titan said. The pro forma net loss would have been $4.8 million for the second quarter of 2000 and $5.8 million for the six months.
Titan President and CEO Maurice Taylor Jr. said the company reduced its long-term debt by more than $30 million and ended the 2001 quarter with a cash balance of over $20 million despite what he called difficult economic conditions.
``This is a commendable achievement,'' he said, ``in light of Titan's earnings being affected by a reduced level of operational activity at the company's facilities. Increased efficiency has led Titan to alter operating schedules as a means of controlling inventory and reducing costs.''
Mr. Taylor said trading conditions also were adversely impacted by the high cost of the U.S. dollar.
``One-fourth of Titan's business is generated overseas, and the strength of the dollar has hurt both sales and profit in dollar terms, although the entire European operation is showing improvement year over year in local currency,'' Mr. Taylor said.
He said the company believes conditions in the agricultural tire market will improve during the fourth quarter, whereas customer demand in the construction tire market will remain flat throughout the rest of this year. ``We expect nearly all business segments in which Titan participates to improve in 2002,'' he added.
Memphis, Tenn.-based TBC Corp. reported record sales and income in the second quarter. Net income was $5.5 million, up 10.3 percent from $5 million a year earlier. Net sales for the quarter increased 23.8 percent to $255.5 million from $206.4 million in the 2000 period.
Net income in the first half increased 9.3 percent to $9.8 million from $9.0 million a year earlier. Net sales were $482.7 million, an increase of 25.8 percent from $383.8 million in the year-earlier period.
TBC President and CEO Larry Day said record sales and earnings for the quarter affirm the value of the company's efforts to increase its retail presence.
``We are especially pleased that this marked another quarter in which we surpassed published analysts' projections. We believe that our 2001 target remains reasonable for attaining the milestone mark of $1 billion in annual sales for the first time,'' he said.
Mr. Day said that although the company faces difficult year-to-year earnings comparisons in the coming third and fourth quarters, ``we expect to show a gain for the second half as a whole, resulting in increased earnings per share.''