MUSCATINE, Iowa (April 18, 2003)-Bandag Inc. reported first quarter net income of $2.4 million despite a 9-percent decline in sales and a lower operating margin.
The sales drop, to $175.3 million, reflects a 4-percent dip in tread rubber sales and a 21-percent decline in sales, to $63.6 million, by the firm's Tire Distributions Systems Inc. subsidiary, which has sold or closed 44 locations since year-end 2001. Despite the lower sales and divestitures, TDS cut its operating loss to $4.1 million from $6 million.
In last year's first quarter, Bandag reported a net loss of $46 million, which includes the effects of an accounting change.
Bandag Chairman and CEO Martin G. Carver said the company is “encouraged” by the reaction of certain customer segments to its efforts to provide “innovative” solutions for commercial tire service.
“Feedback indicates we have the tools and capabilities to improve the predictability of a fleet´s tire system cost and the consistent service coverage and product quality to allow fleets to operate more efficiently," he said.
Commenting on the first quarter, Mr. Carver said, “Bandag´s earnings performance fared reasonably well in spite of dealer inventory stocking in the closing months of 2002, which adversely impacted first quarter 2003 results, and economic softness in North America during the first three months of the year.”
In North America, Bandag´s traditional tread rubber business suffered an 8-percent decline in demand, but management believes that half of the decline relates to dealer buying during the fourth quarter as dealers stocked inventories ahead of a January price increase.