Titan reports drop in sales and profits
Titan International Inc. reported sales for its fourth quarter 2014 were $383.3 million compared to $494.4 million in the fourth quarter of 2013. The company experienced a $65.9 million net loss in income from operations, compared to a gain of $0.6 million last year.
Gross profit for the fourth quarter 2014 was $18.2 million, or 5% of net sales, compared to $49.3 million in fourth quarter 2013, or 10% of net sales.
Sales for the full year 2014 were $1,895.5 million, down 12%, compared to $2,163.6 million in 2013.
Gross profit was $140.6 million, or 7% of net sales for the year ending Dec. 31, 2014, compared to $295.2 million, or 14%, at Dec. 31, 2013.
Income from operations was $(97.6) million, or (5%) of net sales for fiscal year 2014 compared to $102.4 million, or 5% of net sales for 2013.
Maurice Taylor, CEO and chairman, said, "2014 was a year of very real challenges for businesses in the agriculture, construction and mining sectors. Like others, Titan was faced with big sales drops in the agriculture market while the earthmoving/construction segment experienced continued weakness. We reduced our global employee count to under 6,500 to match reduced production.”
Taylor said other challenges currency impacts due to a strong U.S. dollar and a union slow down due to new production rates. The company also ushered in a new leadership team headed by Paul Reitz and assisted by CFO John Hrudicka and saw the retirement of several valued team members.
Taylor noted that despite these challenges, there are several factors that he believes will “lead Titan to the top in coming years.
"The Grizz Squad has grown to 24 people in the field. They are the reason for the success of our LSW (low side wall) technology. The addition of LSW assemblies as an option on new equipment is expected to increase tire and wheel business each year going forward. We are listening to our customers and engineering solutions to fit their needs.
“We've introduced new tires, wheels and track components over the past 12 months that will continue to infiltrate the marketplace in 2015. We also have new tire equipment going into Russia and Brazil which we believe improves the quality and range of tire offering.”
On the sales dip, Taylor said, "This hit every segment for which Titan produces product. The mining demand was slow at the OEM level for the entire year. During the fourth quarter, the aftermarket improvements started coming. Agriculture OEMs kept cutting their schedules in big iron which is high dollar and fair margins. The 100 hp and under sector has increased, but margins are lower for this product category. The aftermarket margins were fair. Construction is steady but it has not gotten back to the levels experienced during 2007. Pricing is dropping in all items due to material reduction and over supply.”
"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. With the LSW coming on-stream our costs have been reduced and we can react quickly.”
To read the complete financial release, click here.