Net profit also fell year-over-year, dropping to $13 million from $21.4 million last year.
Titan said the “lower sales levels resulted from reduced demand for the company’s products across the board, a consequence of the worldwide recession and global economic crisis.These items had a larger negative impact on Titan’s earthmoving/construction second quarter and year-to-date sales, which were each approximately 45% lower when compared with 2008 results.”
“There were some good points and bad points to the second quarter,” said chairman and CEO Morry Taylor. “The facts are simply that business has slowed down. The construction equipment business is really off and will not see any life until fourth quarter 2010.Further, Titan’s main competitors in the OTR market – Michelin, Bridgestone and Goodyear – have all been reducing prices greater than material costs, which means margins will suffer. Because our competitors don’t run their operations as stand alone businesses, they have no real sense if they are making a profit.Titan can and will be competitive with anyone.
“Small agriculture tractor volume has hit bottom, but Titan will not see any growth in the business until the general U.S. economy picks up, and I don’t think that will happen until afterthe 2010 election,” Taylor said. “Large farm tire business has been reduced alittle, but should maintain its good volume. Titan’s main two competitors havereduced prices, but not as much in this large radial tire business. Thissegment of business has been Titan’s strongest for the past three years.
“The mining tire businesshas been a mixed bag,” he continued. “The great shortage of recent years isover and there is an excessive supply of all large radial tires. Selling priceon 63-inch tires has dropped from $55,000 per tire to approximately $42,000now, and I expect it to drop to $35,000 before the end of the year. There isexcess volume in all tires smaller than 63 inches, and currently plenty ofcapacity for 63-inch tires at today’s volume, and with added capacity, theindustry will go from shortage to over capacity in the next 12 months. Titan’sunique position in this market is that we believe we are the low costproducer.”
Taylor also noted that Titanemployee salaries have been cut 5% across-the-board, and his own salary hasbeen reduced by 10%, with the reduction going to fund a scholarship trust forthe children of Titan employees. (Tire Review/Akron)
