It’s Time to Work ‘Hard and Smart’, says Titan’s Taylor
While overall sales declined 8.2 per cent to US$232.6 million during the first quarter of 2009, Titan International reports that its sales of agricultural sector products hit an all-time first quarter record. “Large farm tyres and wheels were selling well in the first quarter of 2009, along with Titan’s new super giant mining tyres,” commented Titan chairman and CEO Maurice M. Taylor Jr. upon the figures’ release. These record agricultural sales of $187.3 million represent an increase of almost eight per cent on the $173.5 million generated in the first quarter of last year.
Gross profit for the quarter was $30.1 million, a drop of 6.8 per cent. Titan notes, however, that when gross profit is expressed as a percentage of sales, there was a slight improvement to 12.9 per cent in the first quarter of 2009, compared to 12.8 per cent in the first quarter of last year. First quarter income from operations was $14.1 million, 12.4 per cent less than last year’s $16.1 million. Net income for the first quarter was $7.0 million, down 13.6 per cent on the $8.1 million earned in the first quarter of last year.
“It is difficult to predict what will happen moving forward,” stated Taylor in reference to agricultural tyre sales. “The price of corn is holding and soybeans are up, so the agricultural market looks good, but are farmers going to keep buying with all the uncertainty in the economy? I don’t know. The orders for second quarter are good, but lead times are much shorter today than six months ago. All of Titan’s material costs are dropping except nylon.”
Regarding the mining sector, Taylor added: “There is no shortage of giant mining tyres today and pricing has dropped by at least 25 per cent because of the drop in material costs. Natural rubber is projected to drop from approximately eighty cents today to fifty cents by the end of the year. In September 2008, it was one dollar and fifty-two cents.
“The great news in all of this is that it’s time everyone really gets down to working hard and smart. Since Titan has been running at an SG&A level of five to seven per cent, we are set to grow our market share. Titan will be making improvements in every product we make, and I will be visiting every customer I am able to this year. Titan can use this environment in order to grow our market share, but if this economy turns up, then ‘Katie bar the door,’ for the good times will be back,” Taylor concluded.