Three tire industry companies reported sales and earnings growth in the first quarter, but one firm still is cautious about its outlook despite the gains.
In the quarter, Alliance Tire Co. (1992) Ltd. reported slim earnings, breaking four straight years of losses. Bandag Inc. also saw earnings and sales boosts in part from an improving North American trucking industry. Carlisle Companies Inc., however, is more cautious despite its increases so far this year.
Alliance Tire posted net earnings of $900,000 last year, breaking a skein of four straight years of losses.
Alliance said it also posted significant gains in operatings earnings, and sales grew 29.7 percent to $129.3 million. Sales from exports accounted for 76 percent of revenues. That was up from 71 percent in 2003 as exports outgrew domestic sales 39 to 7 percent.
``The improvements we saw in 2004 reflect Alliance's greater efficiency, expansion into new markets and opportunities to serve key markets that are experiencing tight supplies,'' said Alliance President Joseph Anglister. The company is experiencing record sales in both North and South America, he added, without giving specifics.
The Israeli tire maker's growth occurred despite higher raw materials costs and fluctuating currency rates, Mr. Anglister said. The latter's effect on company loans caused the firm to fall into the red in the fourth quarter despite a rise in operating income.
Production increased 20.9 percent to 38,090 metric tons. Alliance makes agricultural, multi-purpose and industrial tires for export and passenger and light truck tires for the local market.
With help from an improving North American trucking industry, Bandag reported a 7.5-percent increase in net sales and a 48.3-percent growth in net earnings for the first quarter.
Muscatine, Iowa-based Bandag reported net sales of $186.6 million, up from $173.5 million last year. Net earnings jumped to $5.96 million from $4.02 million.
Bandag said net sales were positively affected by a sales increase of $10.8 million by its Speedco truck lube subsidiary, which it purchased controlling interest in last year. Also helping were a 5-percent increase in North America business unit volume coupled with a 7.2-percent increase in Speedco's net sales and an increase of 6 percent in international business unit volume with a net sales boost of 29 percent.
Currency translation also positively impacted sales by about $4.2 million. Factors negatively impacting overall sales included an $8.3 million decline in sales from divested locations of Bandag's Tire Distribution Systems (TDS) Inc. subsidiary and a 17-percent decrease in European business unit volume as well as a 9-percent fall in sales in the TDS unit.
``On the positive side, we believe continued strength in the trucking industry in our major markets will work to Bandag's benefit ,'' said Martin Carver, chairman and CEO of Bandag. ``...At the same time, we recognize that continued increases in raw material and transportation costs will be a concern throughout 2005.''
Despite double-digit growth in sales and earnings in the first quarter, Carlisle is cautious about the remainder of 2005, citing ``uncertainties'' about raw material costs and interest rates.
``Though our key markets remain strong and our outlook for improved pricing and margins is positive, we must temper our optimism,'' said Richmond McKinnish, president and CEO. ``Uncertainties surrounding future costs of oil-based commodities and certain chemicals as well as the impact of rising interest rates require that we maintain our 2005 guidance of $4.10 to $4.25 per diluted share for income from continuing operations.''
For the quarter, Charlotte, N.C.-based Carlisle's net income from continuing operations rose 29.2 percent to $30.1 million; sales jumped 17.7 percent to $592.3 million.
Industrial components, which includes Carlisle Tire & Wheel, reported 8.8-percent better operating earnings and 15.5-percent higher sales. Carlisle attributed most of the net sales increase-to $222 million-to growth in the tire and wheel business in the commercial power equipment and lawn care, ATV and replacement supply chains. The addition of sales from solid tire maker Trintex, acquired last June, accounted for about one-third of the sales improvement over 2003.