QUINCY, Ill. (March 2, 2010)—Titan International Inc. expects 2010 to bring improvements over a disappointing 2009 because construction industry inventories are depleted, farming still has “fair sales volume” and the mining market “is good and pricing is fair,” according to Chairman and CEO Maurice Taylor Jr.
Taylor did not offer specific earnings or sales forecasts, but he did put the unionized work force at the firm's tire plants on notice that Titan will address the need for more flexibility in its contract negotiations starting in November.
He said minimum employment clauses in the labor agreements with workers at the firm's Des Moines, Iowa, and Freeport, Ill., plants meant those factories were measurably overstaffed throughout most of the fourth quarter, contributing to the firm's losses for the quarter.
For 2010, Titan “may experience” lower sales throughout most of the first half in all of its market segments but is “cautiously optimistic” for a recovery in the second half based on signs it has observed that lead it to believe the “market may currently be experiencing the bottom of the cycle.”
On the negative side, the company noted that energy, raw material and petroleum-based product costs have been “exceptionally volatile” and therefore may impact margins negatively.
By market, Titan sees agricultural-related sales falling short of 2009 on “challenging” conditions. Commodity prices have declined from last year's highs but remain above the long-term average, Titan said in its 10-K financial report filed with the Securities and Exchange Commission.
In the earthmoving/construction market, Titan finds it challenging to make a forecast because of the magnitude and duration of the global economic crisis. It does, though, expect some improvement compared with the “dramatically depressed” sales levels in this segment.
The company does see some growth potential in underground mining, Taylor said, as increasing environmental restrictions on above-ground mining will revive the underground sector.
In the consumer sector, Titan expects continued weakness in consumer discretionary spending to affect its business.
Capital expenditures for 2010 are forecasted at $12 million to $16 million, down considerably from 2009 and 2008, when the company invested heavily in the giant OTR business.