The latest financial reports released by tire industry-related firms show a mixed bag of results for each company.
The reports cover fiscal-year or first-quarter results, or in some cases, revisions of earnings estimates.
Charlotte, N.C.-based American Tire Distributors Inc. (ATD) returned to the black in fiscal 2002, reporting net income of $37.4 million on 4.3-percent lower sales of $1.06 billion.
The company attributed the turnaround to reduced operating expenses and a one-time gain on the repurchase of company notes.
``In 2002, we worked hard to grow market share, despite an industry-wide sales decline and our decision to totally exit the retail business,'' said Richard P. ``Dick'' Johnson, president and CEO of ATD.
``Through our diligent management of expenses and a tight focus on true customer service, we actually increased our market share and our profits. Our goal has been to make steady improvement, even in these tough times.''
Due in large part to a 19.3-percent reduction in operating expenses, ATD reported pre-tax income for the year ended Dec. 29, 2002, of $12.9 million from continuing operations, excluding the extraordinary gain, compared with a pre-tax loss of $23.8 million in 2001.
Net income, including the extraordinary gain, increased $68.4 million to $37.4 million vs. a net loss of $30.9 million a year ago. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased $17.9 million, to $40.2 million from $22.4 million.
The 2002 net income includes an extraordinary gain in the amount of $30.1 million related to the company's repurchase of its Series D Senior Notes, announced April 12, 2002, and included in the first-quarter results. The reported loss in 2001 includes a $12.6 million loss on disposal of discontinued operations.
Hanover, Germany-based Continental A.G. expects earnings in fiscal 2003 to be on par with 2002 despite an economy that management describes as unpredictable and uncertain.
Continental reported $655 million in operating earnings last year-a record figure despite a background of uncertainty about the economic situation in the automotive business. On a net basis, Continental turned a loss in 2001 into earnings of $213.2 million last year, while sales rose slightly to $10.8 billion.
Continental's earnings gains were aided by returns to profitability by the passenger and commercial vehicle tire units and despite continued losses by Continental Tire North America Inc.
Conti didn't elaborate on its performance in North America other than to say passenger tire volumes in the U.S. and Mexico fell short of expectations, while growth in replacement commercial vehicle tires more than compensated for a decline in original equipment deliveries.
Earlier, the company said the ``unsatisfactory'' tire business earnings in North America would force it to amortize Conti Tire's remaining goodwill of $47 million.
A report by Morgan Stanley Equity Research in November stated the North American unit's loss was $27.4 million for the third quarter and $80.4 million for the nine months. The loss included costs of $19.6 million related to the firm's recall of 595,000 tires early in 2002.
Conti's passenger tire unit reported earnings before tax and interest of $174.2 million on 6-percent lower sales of $3.56 billion. The lower sales reflect the disposal of the National Tyre Service retail chain in Great Britain, a drop in the euro-dollar exchange rate and the weak North American replacement business, Conti said.
The company said its OE shipments were up 5 percent over 2001, boosting its market share.
Pre-tax earnings for the commercial vehicle tire sector hit $87.6 million on sales of $1.24 billion.
Cooper Tire & Rubber Co. of Findlay, Ohio, has revised downward by as much as 32 percent its first quarter earnings expectations, indicating that net income would likely be in the range of 17-21 cents per share vs. the current analyst consensus of 25 cents per share.
Thomas A. Dattilo, chairman, president and CEO, attributed the lower expectations to continuing weakness in the North American replacement tire market.
``Replacement tire demand remains very soft, product mix has been weak and raw material costs have been even higher than we expected,'' Mr. Dattilo said in a prepared statement. ``On the other hand, our automotive group operations have performed as expected, with sales exceeding last year's first quarter.''
Cooper expects to release its first quarter results on April 17 before the market opens.
Rochester, N.Y.-based Monro Muffler Brake Inc. expects its earnings for the fourth quarter and fiscal year ended March 29 to exceed previously issued estimates by about 2 percent, based largely on higher-than-expected sales gains.
Monro Muffler, which has expanded its tire-related business in the past 18 months by acquiring Kimmel Automotive in Maryland and Virginia and Frasier Tire Inc.'s retail stores in South Carolina, said earnings should increase to $1.44 to $1.46 per share, up from $1.41-$1.43 released earlier.
``Our better-than-anticipated results are being driven by an estimated 7-percent comparable store sales gain in the fourth quarter, resulting largely from continued increases in store traffic, scheduled maintenance services and tire sales,'' said Robert G. Gross, president and CEO.
``This strong performance is a testament to our ongoing strategy of attracting customers into our stores with discount oil changes and encouraging repeat business by offering superior customer service and a compelling assortment of quality products and services,'' he said in a prepared statement.
The company plans to release its fiscal 2003 results during the week of May 19.
Monro Muffler Brake operates a chain of 560 stores in 18 states providing automotive undercar repair and tire services in the U.S., operating under the brand names of Monro Muffler Brake and Service, Speedy Auto Service by Monro, Kimmel Tires - Auto Service and Tread Quarters Discount Tires.