Alliance Tire profits from 6.6% sales increase
Alliance Tire Co. reported an operating profit of $1.23 million on sales of $99.7 million in 2003. That compares to a $14.9 million operating loss on sales of $93.5 million in 2002.
The 6.6% year-to-year sales increase was followed by strong first-quarter sales, which were up 57.5% vs. the previous quarter.
Shaul Nuri, marketing and sales manager, says first-quarter results in 2004 continue the company's positive performance trend.
In 2003, Alliance, based in Hadera, Israel, posted an operating profit for the first time in four years. Although the company recorded a net loss of $13.1 million, that figure was 50% less than it was in 2002.
According to Nuri, approximately 83% of the 2003 net loss resulted from financing expenses, mostly due to currency differentials from Alliance's loans in euros.
A one-time restructuring expense of $3.4 million -- the costs associated with a 19% reduction in the company’s workforce -- also affected net results.
Alliance posted a positive EBITA (earnings before interest, taxes and amortization) of $8.2 million in 2003, a far cry from its negative EBITA of $6.2 million in 2002.
"Our improvements are the result of a strong commitment on the part of all of our employees, from the loading dock to top management," says Nuri. "Last year, we made the difficult decision to decrease our workforce by 19%, and those remaining -- including management -- took a 10% cut in pay to get Alliance back on the right path.
"We also worked closely with the banks to restructure our debt, which will help us tremendously in the long run.
"It is extremely telling to note that our 2003 output was up 19% over 2002, and our cost per ton of output dropped 11.5% over the same period, despite significant increases in the cost of raw materials."
Even the political climate in the Middle East hasn’t dampened Alliance’s recovery, says Nuri.
"Throughout the company’s 53-year history, unrest in the Middle East has not affected our performance, and last year’s improvements (at Alliance's factory in Israel) prove it. Deliveries are better than ever, our list of clients is growing, and sales are increasing domestically and around the world.
"Since 1951, in spite of wars and economic downturns, we have built our business through relationships with loyal clients, hard work on the part of our employees, and continually improving quality and service."
To see how Alliance Tire's financial results fared compared to other tire and automotive industry participants, check out our fiscal year 2003 update in the Finance section.