Bandag Net Earnings Halve

Bandag Inc’s fourth quarter 2005 net earnings slid to less than half of their 2004 level despite strong net sales of $252.3 million (£142 million), up seven per cent. Consolidated net earnings totalled $12.1 million, compared with $30.8 million in 2004. According to the company, net sales were positively impacted by foreign currency translation to the tune of approximately $3.5 million.

Announcing its full-year 2005 results, Bandag reported consolidated net sales of $914.6 against $864.3 million in 2004. Consolidated net earnings for 2005 were $49.5 million compared to $66.9 million in 2004.

In 2005 Bandag’s North American business unit volume increased two per cent while net sales increased eight per cent compared to fourth quarter 2004. European business unit volume reportedly increased four per cent with net sales also increasing four per cent. International business unit volume decreased four per cent while net sales increased fourteen per cent. All international operations experienced a decrease in volume except for Mexico and Asia.

Bandag’s Capital expenditures totalled $63.4 million up to 31 December 2005, compared to $39.2 million for the same period last year. The increase in capital expenditure is primarily due to expenditure made by Speedco for new facilities and expansions of tire lanes at existing facilities.

Martin G Carver, Bandag’s chairman of the board and CEO commented: “Unprecedented increases in energy prices and rapid globalisation of the tyre industry are clear evidence that the business norms we have managed to are quickly changing. TDS and Speedco act as bellwethers for Bandag, providing useful insight to the direction and trends in the trucking and OTR markets for commercial tyres. Both indicate that the trucking economy remains vibrant, giving us confidence in the continued strength of Bandag, Speedco and TDS to take advantage o opportunities in the marketplace.

“Nevertheless, we are well aware of the more volatile aspects of the business, particularly raw material costs, and we are inclined to manage conservatively in order to minimise their impact on Bandag and the Bandag Strategic Alliance of Dealers.”

Carver continued: “Bandag’s tread volume increased one per cent in fourth quarter compared to 2004 and was even for the year compared to 2004. Multiple price increases in the North American, European and International business units could not keep pace with unprecedented volatility in raw materials costs, which exerted pressure on margins.”