As the company prepares to expand its Texas facility and get Titan Tire Reclamation Corp.’s production on its way, Titan International’s first half net sales and gross profit for 2016 are both down compared to 2015.
Net sales for Titan’s first half decreased 16% to $652.0 million from 2015’s $778.1 million. Additionally, sales volume was down 5% due to the agricultural and earthmoving/construction segments seeing lower volume sales compared to 2015, Titan said.
The company added that the “the consumer segment was affected by the decrease in high-speed brake sales related to lower Chinese infrastructure investment and by lower sales related to economic stress in Brazil.” Unfavorable currency translation also affected sales by 5% and a 6% reduction in price mix also lowered sales.
Revenues from external customers in the ag, earthmoving/construction and consumer segments were all down compared to 2015, with ag at $299.5 million compared to $368.8 million earthmoving/construction at $272.7 million compared to $311.8 million, and consumer at $79.7 million compared to $97.4.
Company CEO and Chairman Maurice Taylor stated he believes the company is still in a great position to expand its tires, wheels and assemblies business for farm, construction and mining.
“We continue working to lower our production costs of wheels and tires,” said Taylor. “This will come from operations as well as our selling, general and administrative expenses. Additionally, Titan has leased out (with a purchase option) an additional 500,000 square feet in our Brownsville, Texas site. We now have over 800,000 square feet leased and the possibility of leasing another 200,000 square feet in the near future.”
“Titan Tire Reclamation Corp. (TTRC) is expected to be in full production by late August. We had planned to be running in April, but obtaining the permits and training requirements took longer than expected. Then the great forest fires of Fort McMurray occurred which shut everything down until July. TTRC will be filing a business interruption insurance claim which could offset a portion of the costs associated with the delays,” Taylor adds.”
Gross profit for the first six months of 2016 decreased to $77.0 million compared to $93.8 million in 2015, while gross profit margins remain around 12% as Titan continues to focus on improving productivity efficiency, rationalizing expenditures, finding lower cost material, improving quality, and optimizing prices, the tiremaker said.
Income (loss) from operations for the first half was $4 million compared to income from operations of $8.3 million in 2015.
Titan’s year-to-date expenditures were $18.1 million for 2016 compared to $22.5 million for 2015.
