MUSCATINE, Iowa (Oct. 20, 2005) — Bandag Inc.'s third quarter net earnings fell 6.9 percent to $18.7 million, while sales for the quarter rose 2.5 percent to $245.3 million on better tread rubber sales in North America and higher sales at its Speedco Inc. unit.
Bandag Chairman and CEO Martin Carver attributed the lower earnings for the third quarter to declining business overseas. “While we experienced growth in North American tread volume during the quarter, results from Bandag's European and International businesses declined, primarily due to competitive pressures in individual markets,” he said.
Net sales in 2005 were impacted positively by approximately $5.1 million due to the effect of translating foreign currency denominated net sales into U.S. dollars, Bandag said.
For the nine-month period ending Sept. 30, earnings rose 3.8 percent from 2004 to $37.4 million. Sales increased by 5.3 percent to $662.4 million.
Mr. Carver noted in his outlook for the remainder of the year that Bandag will feel the impact of Hurricanes Katrina and Rita on Gulf Coast oil well and refining operations that supply raw materials. He said he was “proud of the Bandag team that quickly took precautions against the potential impact of these storms to assure our tread manufacturing operations an uninterrupted flow of raw materials in the fourth quarter.”
However, Mr. Carver said the likelihood that raw material and energy price volatility will subside anytime soon is low, and Bandag is monitoring and managing the impact of energy costs on its business worldwide.
Bandag highlighted these factors as affecting third quarter net sales:
* In North America, unit volume increased 2 percent and net sales jumped 11 percent from the same year-ago period. Price increases in December 2004 and May helped net sales.
* Tire Distribution Systems Inc. sales declined 22.1 percent from the prior-year period to $47.3 million because of divestitures in 2004. The divested locations had posted net sales of approximately $19.2 million in the third quarter of 2004.
* Speedco sales jumped 29.6 percent from 2004 to $22 million. Increased volume at existing locations, the addition of three facilities and 27 tire lanes affected net sales positively.
* European business unit volume and net sales were down 7 and 2 percent, respectively. A September 2004 price increase positively affected net sales.
* International business unit volume fell 17 percent while net sales rose 7 percent. All international operations experienced volume decrease except for South Africa and Asia, with Brazil experiencing the the largest decrease at approximately 30 percent. Net sales were impacted positively by price increases and approximately $3.9 million due to the effect of translating foreign currency into U.S. dollars.