Titan International Inc. reported operating and net losses for the quarter and nine months ended Sept. 30 as the OTR tire and wheel maker suffered lower sales of key, higher profit-margin products, higher operating expensese and currency translation losses in its international business.
As Titan CEO and Chairman Maurice Taylor stated earlier in October in a open letter to shareholders, Titan figures it can return to profitability through efforts to shore up market share in key sectors while also cutting costs, in part through personnel reductions.
“Titan will continue to strengthen our path toward growth and improved performance as we enter into 2015 with cost reductions and new product offerings, including the LSW wheel/tire campaign,” Mr Taylor said.
For the third quarter, Titan reported a pre-tax loss of $22.1 million and a net loss of $17 million on 9.6-percent lower sales of $449.6 million. The company reported pre-tax and net income of $13.4 million and $7.65 million, respectively, in the 2013 quarter.
For the nine-month period, the pre-tax and net losses were $62.7 million and $47 million, respectively, vs. pre-tax and net income of $88.8 million and $50 million a year ago. Sales fell 9 percent to $1.51 billion.
Mr. Taylor attributed the quarterly performance to a number of factors, including a drop in demand for large agriculture and mining industry equipment, lower selling prices that reflect drops in steel and natural rubber costs, higher sales, general and administrative costs related to a Russian tire plant Titan acquired earlier this year, and roughly $13 million in currency translation losses.
“As for our outlook on the markets ahead,” Mr. Taylor said, “we believe large agriculture equipment sales will be down at least through 2015 in North America.”
Equipment sales in South America will remain relatively flat, he said, but Titan has expanded its product offering in Brazil to cover more large agriculture and medium size construction.
Europe will remain stable as the challenges in this region continue, he added, although Titan anticipates new track products there will result in new sales. In Russia, Titan expects to cut its employee count to 1,000 from 2,300 in line with current demand.
Nonetheless, Mr. Taylor said Titan is updating molds and equipment at the Voltyre-Prom plant in Ekaterinburg, Russia, to improve performance and efficiency.
“We are taking steps to improve the business despite these challenging markets,” he said.
Titan, in partnership with the United Steelworkers local at its Bryan, Ohio, plant, is working to realign that facility “to current market conditions and improve profitability in the earthmoving/construction segment.” He did not disclose specific personnel targets.
On the revenue side of the ledger, Mr. Taylor said Titan is on schedule to launch pyrolysis operations late next year at its Titan Tire Reclamation Corp. in Fort McMurray, Alberta, where it plans to reclaim rubber, carbon black and steel from OTR tires and conveyor belting.