Most tire industry companies achieved solid gains in earnings and sales in 2005.
Pirelli & C .S.p.A. saw double-digit earnings and sales growth last year and is forecasting further growth in 2006. Likewise, Sumitomo Rubber Industries Ltd. reported steady growth with a 33.8-percent jump in net income and a 9-percent gain in sales.
Titan International Inc. saw its 2005 net income remain flat on a 2-percent gain in net sales. It posted a loss in the fourth quarter, during which it bought Goodyear's North American farm tire business.
Carlisle Tire & Wheel Co. posted 6-percent higher sales for parent Carlisle Companies Inc.
Meanwhile, Pep Boys-Manny, Moe & Jack struggled in 2005, falling into the red on high operating expenses and lower sales.
Charlotte, N.C.-based Carlisle Companies Inc. is projecting double-digit earnings growth in 2006 after reporting a 21-percent gain in pre-tax earnings from continuing operations for fiscal 2005.
For the year ended Dec. 31, Carlisle reported earnings before interest and taxes from continuing operations of $209.5 million on 11-percent higher sales of $2.21 billion.
Among individual divisions, Carlisle Industrial Components reported segment operating income fell 9 percent to $55.3 million while sales grew 3 percent to $747.9 million, primarily on the strength of 6-percent higher sales by Carlisle Tire & Wheel Co.
Carlisle Tire reported higher sales on increased demand from the outdoor power equipment, all-terrain vehicles and replacement markets, while sales of styled wheels were lower. The acquisition of solid industrial tire maker Trintex in June 2004 also contributed to the sales growth in 2005, Carlisle said.
The division's sales in the fourth quarter fell 6 percent to $152.1 million on lower sales volume at Carlisle Tire and Carlisle Power Transmission, the firm said. Operating earnings were up 8 percent to $5.6 million.
Tire sales and related services grew about 40 percent last year for Midas Inc., based in Itasca, Ill., but the firm reported lower earnings as it exited its exhaust manufacturing and distribution business.
Sales for the fourth quarter fell 7 percent to $44 million as net income dropped 70 percent to $600,000 from $2 million in the prior period. Sales for the year slipped to $192.5 million from $197.5 in 2004, and earnings fell 46.3 percent to $2.2 million from $4.1 million a year ago.
Midas said the results reflected negative impacts from operating losses related to the wind-down of the exhaust manufacturing business, transformation charges, asset write-downs and other factors. The auto service provider said it will incur an operating loss in its exhaust business of about $1 million in the first quarter, after which the losses will end.
Pep Boys-Manny, Moe & Jack fell $26.2 million into the red in fiscal 2005 on higher operating expenses and lower sales.
The Philadelphia-based automotive retail chain's sales fell 1.5 percent for the year and 0.7 percent for the fourth quarter to $2.24 billion and $549.8 million, respectively, as comparable service sales, which include tires, also fell in both periods.
Comparable retail sales, which include DIY and commercial sales, increased 0.6 percent for both the year and the quarter, but comparable service center revenue, which includes labor plus installed merchandise and tires, fell 1.3 percent for the quarter and 3.9 percent for the year.
For the quarter, Pep Boys' net loss from continuing operations before an accounting change deepened to $22.7 million from a loss of $9.7 million in the prior period.
The firm's loss increased for the year as well. Pep Boys reported a net loss from continuing operations of $35.8 million from a net loss of $25.5 million in 2004. The adjusted net loss-to account for one-time gains-was $26.2 million.
After achieving double-digit sales and earnings growth last year, Pirelli is forecasting further earnings improvements this year based on its focus on higher value-added business segments and continued improvements in the product mix.
For 2005, Pirelli reported 14.6-percent higher sales, 32-percent better operating earnings and 31.3-percent higher net profits.
Pirelli Tyre also reported double-digit gains in pre-tax and net earnings, hitting its 2006 goal of a 9-percent net return on sales a year early, thanks in part to increased selling prices despite higher raw material costs.
Pirelli Tyre's sales jumped 11.7 percent to $4.54 billion, while pre-tax earnings grew 14.6 percent to $647.5 million and net income rose 18.6 percent to $247.5 million.
Pirelli said the tire unit's ``excellent performance of 2005 was the result of a continued focus on the product mix, price increases and volume increases, which more than offset higher energy and raw material costs in the context of less-than-brilliant market demand.''
Kobe, Japan-based Sumitomo, led by its tire business, reported solid gains in earnings and sales last year.
Operating income grew 9.7 percent in 2005 to $453.5 million while sales increased 9 percent to $4.66 billion. Net income jumped 33.8 percent to $232.9 million. Sumitomo did not comment on the results or issue any forecasts for 2006.
The tire segment reported a 20.7-percent gain in operating income to $360.8 million on 11.6-percent better sales of $3.62 billion.
Sales in North America grew 22.5 percent during the year to $526.1 million. Sumitomo sells tires in North America through Treadways Corp.'s Sumitomo Tires division and through Falken Tire Corp.
Titan International Inc. posted a 2-percent gain in net sales in 2005, excluding Titan Europe P.L.C., as net income remained relatively flat at $11 million.
Including the European operations that were spun off last year, Quincy, Ill.-based Titan reported a 7.9-percent drop in net sales to $470.1 million from $510.6 million in 2004. The European sales affected sales in 2004 by $49.4 million.
For the fourth quarter, Titan posted a loss of $5.54 million, deeper than the loss in 2004 of $1.29 million. Net sales in the quarter also fell 8.8 percent to $96.6 million. During that period, Titan bought Goodyear's North American farm tire business for about $100 million.
Titan returned to the black in 2004 after a few years in the red. While 2005's net income was flat, the company posted a 64-percent drop in income from operations to $12 million from $33.3 million in 2004.