AKRON-Four tire industry companies reported increased earnings during the first half despite a tough economy.
Bridgestone Corp., Nokian Tyres P.L.C., American Tire Distributors Inc. and Pirelli S.p.A. all posted net income gains, while automotive aftermarket firm Midas Inc. posted a loss as it exits its wholesale business.
Charlotte, N.C.-based American Tire Distributors Inc. (ATD) reported a 131.6-percent jump in net income to $4.4 million for the second quarter-up from $1.9 million last year-despite the lagging economy, ATD said.
An ATD spokesman said the higher net income ``has come from continued expense management at all levels of our business and the growth in sales we've experienced in the first half of the year.''
The distributor said consolidated net sales for the quarter increased 2.9 percent to $285.7 million vs. $277.6 million last year.
``For the second consecutive quarter, we have been able to outpace the industry's average growth rate despite continued weakness in the replacement market,'' said Richard ``Dick'' Johnson, chairman and CEO of ATD. ``Our plan is to focus on providing excellent service and exceptional value for the products we sell, and our customers are proving this model successful as they reward us with more of their business.''
For the first half of the year, consolidated net sales grew to $543.3 million from $529.1 million in the same period last year.
Net income for the half was $5.4 million compared with $31.1 million in 2002. The 2002 figure included a $30 million net gain on repurchase of the company's series D senior notes, ATD said.
ATD said selling, general and administrative expenses fell $1.4 million in the six months of 2003.
ATD operates 62 distribution centers servicing 35 states.
Bridgestone Corp. reported strong gains in income and sales for the first half of 2003, prompting management to raise earnings projections slightly for the whole year.
Bridgestone's positive results were aided by a return to the black by company operations in North and South America, strong sales gains in Europe and increased efficiencies at the firm's tire plants.
The firm reported double-digit increases in both operating and net income-up 18.3 percent to $550 million and 30.6 percent to $267 million, respectively-while sales edged up 1.7 percent to $9.28 billion.
Full year earnings should hit $675 million, up about 4 percent from earlier projections, Bridgestone said.
In the Americas, Bridgestone Americas Holding Inc. (BSAH) reported a 42.5-percent dip in operating earnings, to $31 million, as raw material, energy and pension and health care costs ate into margins, according to Mike Gorey, controller and vice president of the holding company.
The firm's net income was $11 million vs. a $14 million loss last year. Sales rose nearly 5 percent to about $4 billion in dollar-denominated terms.
``Although the company's performance is not yet where we ultimately want it to be,'' Mr. Gorey said, ``the numbers clearly show that we've stabilized the business and are on track with our recovery.''
Unit sales of passenger and light truck tires declined slightly due to decreases in sales of original equipment and associate brand tires, but this was offset by increased sales of truck and bus tires, BSAH said. In addition, the company said, sales of Bridgestone-brand tires were strong both at OE and the aftermarket, and demand for Firestone-brand tires in the aftermarket continued to recover.
BSAH anticipates full year net sales of $8.05 billion, operating profit of $130 million and net income of $60 million.
Costs related to exiting its wholesale distribution business helped push Midas Inc. to a loss of $32.7 million for its second quarter.
For the same period in 2002, the chain reported net income of $4.1 million. Sales for the second quarter of 2003 were $77.9 million, down from $90.4 million last year.
For the first half, sales slipped 11.3 percent to $152.4 million. Midas said the declines were the result of lower wholesale sales attributed to the phase-out of its network of 77 Parts Warehouse Inc. quick-delivery sites.
Retail sales at company-owned stores fell to $11.2 million for the quarter and $22.9 million for the half, compared with $14.0 million and $27.8 million, respectively, in 2002. Midas said fewer company-owned shops in operation led to the declines.
In the quarter, the Itasca, Ill.-based company recorded pre-tax charges of $50.8 million, including $33.3 million to establish an accrual for future warranty obligations in the U.S. and $17.5 million for asset write-downs and severance costs associated with the closure of the wholesale business.
Further charges for closing centers in Canada will be posted in the third quarter, though they are not expected to be as large, the company said.
Midas plans to close 11 of its 12 distribution centers by the end of 2003. Its remaining warehouse in Chicago will distribute products from the company's exhaust manufacturing plant in Hartford, Wis.
``Midas is making significant progress on the major restructuring, which will enable the company to focus on the profitable franchise retail business,'' said Alan Feldman, president and CEO. ``While we are beginning to see positive signs in our business, 2003 will continue to be a transition year.''
After announcing the restructuring in April, Midas set up agreements with AutoZone Inc. in the U.S. and Uni-Select Pacific Inc. in Canada to distribute parts to about 1,900 Midas shops in North America. The transition started in June, and so far 263 Midas shops in the Southeast have switched, Midas said.
Nokian Tyres P.L.C. reported increased sales and earnings in its second quarter and half year, and management is positive about the company's goal to exceed last year's results for the entire year.
Operating profit for the half year was $18.6 million, nearly double that of a year ago, while sales rose 9.1 percent to $234.3 million.
Sales from Nokian's manufacturing operations increased 17.4 percent, while revenue from the Vianor retailing network edged up 0.4 percent.
Net income for the first half was $9.1 million, up from $1.1 million in last year's corresponding period.
Second quarter sales rose 5.9 percent to $128 million while net earnings soared 75 percent to $8.4 million.
The Nokia, Finland-based company sees demand for its products staying strong in its key markets in Scandinavia, Eastern Europe and Russia; on the downside, Nokian predicts raw material prices will continue to rise, and the falling value of the U.S. dollar is reducing the profitability of tires shipped to North America.
Capital spending during the period advanced 34 percent, to $23.2 million, as the firm bought new molds and modernized machinery and equipment to eliminate production bottlenecks.
At the same time, Nokian reported production of Nordman-brand winter tires commenced at the Kirov Tyre plant in Kirov, Russia, according to the firm's agreements with Russia's Amtel Holdings. Renovation work at the Voronezh Tyre plant in Voronezh, Russia, progressed and new machinery was installed in anticipation of doing test production this year for the start of full operations in early 2004.
Contract manufacture of Nokian-brand low-speed summer tires in Slovakia and Indonesia and heavy-duty tires in Poland and Hungary increased as planned.
Milan, Italy-based Pirelli S.p.A. reported an improved first half financial performance on ``increasingly good'' tire division results, despite turmoil in the cable sector.
Tire division operating earnings rose 14.4 percent, to $141 million, shoring up the S.p.A. operating earnings, which edged up 3.2 percent, to $309 million, despite a loss in the telecommunications cable sector.
First half group sales fell 9.8 percent to $3.36 billion.
Tire sector sales inched up slightly to $1.68 billion, although Pirelli said the increase would have been closer to 14 percent when the exchange rate fluctuation is factored out. Tire tonnage sales were up 8 percent, the company said.
The increased business volume and efficiency measures in the tire sector had a positive impact on earnings and offset an increase in unit costs and the negative exchange rates effect of nearly $22 million, the company said.
Management expects the tire and energy cable sectors to continue improving in the second half and the telecom cable business to reach break-even by the fourth quarter.