Titan reports losses, 12% sales drop

QUINCY, Ill. (Feb. 27, 2015) — Titan International Inc. suffered net and operating losses last year on 12.4-percent lower sales, but Chairman, CEO and President Maurice Taylor Jr. is confident the leaned-out firm will be back in the black in 2015 as key markets recover.

Titan's loss from operations reached $97.6 million in fiscal 2014, vs. a profit of $102.4 million in 2013, and the net loss hit $130.4 million vs. earnings of $29.7 million.

Sales fell to $1.9 billion.

Mr. Taylor cited drops in demand in all of Titan's major sales categories, currency exchange rate impacts, impairment charges related to asset writedowns and union-led production slow-downs for the company's swing to operating and net losses.

In response, Titan cut its workforce by 1,900 to match the reduced production. Most of the cuts were in Russia, where Titan let 1,300 workers go. The company cut 400 in the U.S. and 100 each in Europea and Brazil to end the year with 6,500 employees.

Titan's sales plunged in the fourth quarter, falling 34.7 percent to $383.3 million, and the loss from operations hit $66.6 million.

Mr. Taylor noted that both the agricultural and earthmoving/construction sectors had weak years in 2014, especially in the higher value-added, higher horsepower equipment categories.

During the year, Titan took $23.2 million in asset impairment and $16.7 million in inventory writedowns, reflecting the accelerated deterioration of the company's business in the large mining sector and overstocked inventories of said products.

By business category, Titan's agricultural and earthmoving/construction segments reported 14- and 18.5-percent drops in sales, while the smaller consumer segment registered a sales gain of 15.4 percent, reflecting the addition of revenue from the Voltyre-Prom acquisition in Russia.

Looking forward, Mr. Taylor said: “Titan is lean and ready to go in 2015. There will be pure cutting and a lot of surprises because that's the way it is here.”

Mr. Taylor listed a number of developments that he said should help the company turn it around, including:

• The ramping-up of production of Titan's LSW (low sidewall) farm tires and wheels, which should yield more manufacturing efficiencies;
• The first OE fitments of LSW products;
• A more efficient manufacturing operation in Russia, which when combined with the ruble-dollar exchange rate changes should improve Voltyre-Prom's ability to export;
• The start-up of Titan Tire Reclamation's recycling business in Canada; and
• The growing impact of the “Grizz Squad” — Titan's field sales teams tasked with promoting the benefits of the LSW product.

Taken altogether, Mr. Taylor said Titan expects pre-tax earnings to rebound this year to about $115 million and ultimately get back to $200 million or more once revenue recovers to $2 billion-plus.