MUSCATINE, Iowa (Jan. 28, 2002) — Bandag Inc. reported a 27.4-percent drop in 2001 consolidated net earnings to $43.8 million as weak offshore business offset gains in North America.
Sales for the year dipped 3.1 percent to $964.9 million. For the fourth quarter ended Dec. 31, Bandag's consolidated net earnings surged 17.6 percent over the same period in 2000 to $17.4 million while consolidated net sales for the quarter declined 1.4 percent to $249.2 million vs. $252.7 million for the same quarter the previous year.
The company said its fourth-quarter results included non-recurring pretax charges of $3.4 million, primarily for closure of a manufacturing plant in Chino, Calif., realignment of its North American sales force and a provision for certain post-retirement health care costs for terminated employees.
Chairman and CEO Martin Carver noted that Muscatine-based Bandag's offshore operations have experienced difficult economic conditions and strong competitive pressures. “Strong fourth-quarter results in Bandag's North American traditional business—where net sales increased 5 percent over fourth quarter 2000—were offset by weak performance in its offshore operations,” Mr. Carver said. “Gross margin improved by 6 percentage points during the fourth quarter in Bandag's traditional North American business, but this was largely offset by operating expense increases due primarily to changes in provisions relating to litigation.”
Although he is encouraged by the level of business activity at Bandag dealerships during the fourth quarter, Mr. Carver said Bandag doesn't expect an economic recovery before the second half of 2002. He added that there “appeared to have been some fourth quarter hedge-buying by North American dealers,” but the magnitude of that could not be estimated, and those purchases could result in “reduced first quarter 2002 purchases.”
Bandag's equipment sales “remained relatively strong in the fourth quarter,” Mr. Carver noted, “pushing 2001 full-year equipment sales to the highest level in recent years.”