The first half of 2002 provided mostly positive results for tire industry-related companies, as many reported gains in net income and sales.
Continental A.G. expected much-improved net and operating earnings for fiscal 2002 because of double-digit gains in both during the first half. Lower raw material costs and cost-reduction programs propelled Goodyear to post a gain in net income during the second quarter. TBC Corp. continued to report robust results with a 23-percent jump in net income during the half.
Meanwhile, Pirelli S.p.A. suffered drops in earnings and sales as low demand for telecommunication cables and systems impacted the Italian tire maker.
Bandag Inc. reported a 23-percent increase in net income for the second quarter on 4-percent lower sales.
The company does not anticipate any near-term growth for retread products, but CEO Martin G. Carver said the settlement of the company's lawsuits with Michelin Retread Technologies Inc. ``should contribute to continued improvement in Bandag performance,'' because of the reduced legal expenses.
Bandag's Tire Distribution Systems subsidiary reported a $1.4 million loss for the quarter and 5-percent lower sales of $98.8 million. The company blamed the loss in part on higher operating expenses in the areas of health insurance, workers' compensation costs, vehicle expense and lower purchase discounts from suppliers.
For the remainder of 2002, TDS management will rationalize operations to ``significantly improve long-term performance.'' The company did not release details of the program.
For the period ended June 30, Bandag reported net income of $11.7 million on sales of $231.1 million. For the first six months of fiscal 2002, Bandag reported consolidated net income of $12.9 million before an accounting change that required the firm to take a write-off of $47.3 million, leaving the net loss at $34.4 million.
Bandag's tread rubber volume in the U.S., which accounts for the majority of North America's revenues, was down less than 1 percent for the year to date. The company called that ``favorable'' in comparison with estimated U.S. industry shipments-down nearly 4 percent.
Bandag said it spent $5.7 million in the second quarter and $9.7 million for the first six months of 2002, respectively, on legal costs related to its lawsuits with MRTI and Michelin North America Inc. This was on top of $18.3 million spent in 2001.
Increased sales of industrial tires and wheels by Carlisle Tire & Wheel Co. helped Carlisle Companies Inc. improve earnings in the second quarter by 49 percent, to $24.7 million, and sales by 12.6 percent, to $552.3 million.
Sales for the Industrial Components segment-where Carlisle Tire operates-increased 62 percent over the same period in 2001 to $183 million, based on the August acquisition of Dayco Industrial Power Transmission and ``significant'' sales growth of lawn and garden products, ATV tires, and trailer tires and wheels by Carlisle Tire, the company said.
Second-quarter segment operating earnings of $20 million were nearly three times higher than the $6.8 million realized in the second quarter of 2001. Carlisle Tire's contribution was based on increased production levels, aggressive cost-reduction efforts and improved sales volume, the company said.
Goodyear reported net income of $28.9 million for the second quarter as cost reduction programs and rationalization activities started paying dividends, according to Samir G. Gibara, chairman and CEO. The company also benefited from lower raw material costs.
The earnings, Goodyear's best performance since 2000's second quarter, only partially offset the firm's loss in the first quarter, leaving the six months net loss at $34.3 million.
Worldwide sales fell 2.9 percent to $3.48 billion in the quarter and 3 percent to $6.79 billion for the six months.
The North American tire unit saw sales fall 7.1 percent in the quarter to $1.7 billion as unit sales to the replacement market dropped 15.8 percent. Goodyear blamed the drop in large part on a number of its larger distributors postponing purchases. Original equipment shipments were up 6.8 percent.
Operating income for the North American tire unit of $39 million came up 20.3-percent shy of the 2001 second quarter performance.
For the six months, Goodyear North American Tire was $12 million in the red (operating basis) as sales fell 3 percent to $3.35 billion. Replacement market shipments were off 9.5 percent.
Continental A.G. anticipates a ``significant'' improvement in operating and net earnings for fiscal 2002 following double-digit increases in both during the six months ended June 30.
Conti reported a 70-percent jump in consolidated operating earnings to $311.5 million, thanks to lower raw materials costs and the positive effects of restructuring. Sales rose 2.9 percent to $5.1 billion on a 17.9-percent jump in business by the Continental Automotive Systems division.
Tire sales, on the other hand, were down. Sales by the passenger car division, which comprises the passenger and light truck tire activities in Europe and North America, fell 5.6 percent to $1.63 billion, while commercial vehicle tire sales fell 0.9 percent to $572.7 million.
In North America, Conti said its business with the automotive industry was ``gratifying,'' while total sales in the replacement markets dropped slightly. The passenger car tire division boosted operating earnings 57.9 percent to $80.8 million.
Group Michelin, buoyed by better-than-expected first-half results, is forecasting a slight rise in its operating margin for the full year.
The company cautioned, however, that the improvement still depends on continued stability in raw material prices and exchange rate parity.
For the first six months of fiscal 2002, Michelin reported a 16-percent rise in operating income, to $511 million, on 1.4-percent better sales of $7 billion. Michelin credited a ``sharp'' drop in raw materials prices along with internal cost containment initiatives for the gain.
Net earnings, excluding a one-time capital gain in the 2001 period, nearly quadrupled to $228 million.
Michelin's unit sales volume was up 2.2 percent for the period, but the sales revenue gain was held back by negative currency fluctuations.
In North America, Michelin said it raised its market share and improved its product mix in the relatively unchanged passenger and light truck aftermarket, and growth of its original equipment sales outpaced the industry increase, 10.5 percent to 6.3 percent.
In the truck tire aftermarket, Michelin said it has regained most of the market share it lost in the first quarter of 2001, and the price increases instituted in March for the Michelin and BFGoodrich brands have been holding up. On the downside, replacement market demand for truck tires, while up over the depressed levels of 2001, is still running about 7 percent below the 2000 pace.
Michelin said it is increasing its truck tire OE market share thanks to its ``strong presence with the market's most dynamic manufacturers.''
Monro Muffler Brake Inc. reported record sales and earnings for the quarter ended June 29, as the recently acquired Kimmel Automotive stores in Maryland and Virginia ``exceeded our expectations,'' according to Robert G. Gross, president and CEO.
Sales for the firm's fiscal 2003 first quarter were up 10.6 percent to $67.9 million, with the gain attributable entirely to new stores (primarily the 34 Kimmel stores), Monro said. Net income of $3.9 million was unchanged from a year ago.
Monro sold Kimmel's two commercial outlets and retread plant during the quarter (see related story on page 1), and bought out the preferred Kimmel shareholders at a discount, effectively reducing the acquisition price of the retained retail store operations. Monro said earlier that the Kimmel acquistion was worth $9 million-$6 million in cash and the assumption of $3 million in debt.
Myers Industries Inc. doubled its net income in the second quarter to $6.8 million, as sales rose slightly to $153.1 million. Sales by Myers' distribution segment, however, were down 2 percent for the quarter and 1 percent for the six months, as demand for capital equipment was weak.
For the six months ended June 30, Myers reported a 51-percent gain in net income, to $16.9 million, but a 5-percent drop in sales to $302 million.
Titan International Inc. was in the black during the second quarter ended June 30, posting operating earnings of $4 million and net income of $383,000, the company reported July 25.
The figures were a big improvement over the operating loss of $4.56 million and net loss of nearly $4 million posted in the like period of 2001. Net sales for the quarter improved 4.6 percent from 2001 to $125.8 million.
For the half-year, Titan posted a $2.5 million loss on sales of $249.6 million. Maurice Taylor Jr., Titan president and CEO, credited the improvement of the agricultural market segment, the strength of foreign currencies against the U.S. dollar, and the company's cost reduction, product development and delivery improvements as factors in the firm's second-quarter turnaround.
Pirelli S.p.A. suffered a 49-percent drop in operating income in the first half, to $90 million, as demand for telecommunications cables and systems has collapsed, dragging prices down with it.
Sales fell 11.9 percent to $3.35 billion, with the drop in telecommunications sales accounting for the decline.
The tire sector showed further strong growth in the ``top of the range'' segments, although Pirelli did not release details at this time, other than to say the tire sector achieved a positive result.
Pirelli said its tire and energy cables and systems sectors' consistent performances and efficiency efforts in the telecom cables sector should yield earnings progress in the second half.
TBC Corp. reported record sales and earnings per share for the second quarter and said third-quarter earnings should be on target for 34 to 35 cents per share.
Additionally, the company said it expects to continue building its retail business through acquisitions, taking advantage of ``opportunities that may become available.''
TBC's net income rose 23 percent in the period to $6.8 million while sales were up 12 percent to $286.7 million, the company said. The company's unit tire volume grew 7.5 percent over the 2001 period, ``substantially better'' than the industry, TBC said, and same-store sales at the firm's retail stores were up 6.4 percent from a year ago.
For the first six months, net income rose 24 percent to $11.6 million, as sales increased 11 percent to $536.4 million. Tire unit volume was up 8.5 percent, and sales revenue benefited from a favorable tire pricing environment that led to increases in average tire sale prices in both the second quarter and first six months, according to Larry Day, president and CEO.