Financial results for four tire industry companies proved to be a mixed bag in 2009.
The following is a compilation of results from American Tire Distributors Holdings Inc., Cooper Tire & Rubber Co., Pirelli Tyre S.p.A. and Sumitomo Rubber Industries Ltd.
ATD
American Tire Distributors (ATD) suffered a 49-percent drop in net income last year, to $4.93 million, on the effects of higher operating expenses. Sales rose 10.8 percent to $2.17 billion, thanks to the late 2008 purchase of Am-Pac Tire Distributors Inc.
ATD attributed much of its higher operating costs on expenses related to its Am-Pac acquisition, much of which occurred in the first half of the fiscal year before ATD was able to complete its integration of Am-Pac, according to ATD's fiscal 2009 10-K form. Higher rents for larger facilities also contributed.
ATD's pre-tax income from operations fell 41.8 percent to $12.3 million, or 0.6 percent of sales.
Am-Pac's operations contributed $258.4 million in sales last year, ATD said, helping offset lower tire, wheel and equipment sales by ATD's traditional business.
Tires accounted for 93.1 percent of ATD's sales last year, the firm said, with equipment, tools and supplies accounting for 3.1 percent and custom wheels and accessories 2.6 percent. Unit sales of tires were up 14.6 percent last year to 19.6 million units.
ATD distributes tires, wheels and tire service equipment to about 60,000 customers through 83 distribution centers throughout the U.S. The company estimates its share of the U.S. replacement passenger and light tire market was roughly 9.4 percent last year, or about twice that of the next largest competitor.
Cooper
Findlay, Ohio-based Cooper Tire rebounded back into the black for the year, reporting $51.8 million in net income last year after a $219.4 million loss in 2008. Sales in 2009 dipped 3.6 percent to $2.78 billion, compared with 2008.
The year-end earnings were bolstered by a 21.6-percent jump in fourth-quarter sales to $773 million and a $39.2 million profit, compared with a fourth-quarter loss of $143.5 million in 2008. The results included income of $6 million from discontinued operations during the quarter, the tire maker said.
The improved quarterly results were driven by lower raw material costs, improved volumes and increased utilization of manufacturing capacity, according to Cooper. However, these factors were partially offset by unfavorable price and mix.
Fourth-quarter sales for Cooper's North American Tire operations climbed 10.7 percent to $565.6 million, generating a segment profit of $39 million, compared with a $109.1 million loss in the year-ago period. For the year, the North American segment reported $110.9 million in operating income, compared with a $174.1 million loss in 2008, despite sales slipping 6.3 percent to $2.0 billion.
Total light vehicle tire shipments for Cooper's North America segment in the U.S. increased 22 percent, outpacing the total industry shipment increase of 7 percent reported by the Rubber Manufacturers Association, according to Cooper. The tire maker said the higher shipments occurred across all product segments, helping it to increase its market share in the replacement market.
Pirelli
Pirelli Tyre, a unit of Pirelli & C.S.p.A., doubled its pre-tax operating earnings last year thanks to the firm's restructuring efforts and the positive impact of lower raw material costs.
Pirelli Tyre reported fiscal 2009 earnings before interest and taxes (EBIT) of $429 million on 2.6-percent lower sales of $5.55 billion, yielding an operating ratio of 7.7 percent, four full percentage points ahead of 2008 on a post-restructuring charge basis.
Pirelli Tyre cut costs last year by more than $275 million through efficiencies in labor and reduced spending on raw materials, the firm said, offsetting the negative effects of a 5.8-percent drop in unit sales.
Pirelli also cut its research and development investments by about 9 percent.
Pirelli pointed to a strong fourth quarter for shoring up the firm's financial performance for the year. Sales during that period jumped nearly 14 percent to about $1.4 billion and the pre-tax earnings more than doubled.
The firm's consumer business—passenger, light truck and motorcycle tires—fared much better than the industrial business—tires for commercial vehicles and steel cord—reporting a 34.7-percent increase in pre-tax operating income and 0.9-percent sales growth vs. no improvement in earnings and 10.3-percent lower sales.
For fiscal 2010, Pirelli Tyre is forecasting 6- to 8-percent revenue growth with the operating margin holding steady.
Sumitomo
Sumitomo (SRI) reported a 12-percent rise in operating profits for the year ended Dec. 31 despite a 12.8-percent drop in sales.
The divergent results — operating income up to $307 million and sales down to $5.6 billion — boosted SRI's operating ratio more than a full percentage point to 5.5 percent. Net income was up ninefold to $97.1 million.
Sumitomo did not comment on the results, which benefited from a relatively strong fourth quarter. Operating earnings in the quarter climbed 153.4 percent while sales slipped just 0.2 percent.
SRI's tire division reported a 42.1-percent jump in operating profits for the year to $240.5 million on 13.5-percent lower sales of $4.63 billion, boosting the operating ratio two full points to 5.2 percent.
Sales in North America—where the firm's Sumitomo- and Falken-brand tires are sold by Treadways Corp.'s Sumitomo Division and by Falken Corp., respectively—were off 12 percent to $796.3 million, the recently released figures show.
Capital expenditures for the tire division fell 39.5 percent to $320.8 million.
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