QUINCY, Ill. (May 24, 2011)—Titan International Inc. continues to evaluate opportunities to expand its business beyond the pending acquisition of Goodyear's European farm tire business, Chairman and CEO Maurice Taylor Jr. said.
Taylor, who didn't provide any details, said the acquisitions, including the Goodyear deal, could boost Titan's annual sales by as much as $500 million a year.
He said Goodyear still controls the pace of the pending $30 million deal for the European farm tire assets, which Titan estimates is worth about $400 million in annual sales.
Excluding the Goodyear European deal, Titan expects its fiscal 2011 earnings and sales to jump more than 20 percent. Titan is basing its forecast on its acquisition of Goodyear's Latin American farm tire business and rising North American demand.
Titan expects to generate pre-tax operating income of $130 million to $155 million this year on sales of $1.2 billion to $1.35 billion, Taylor said.
“These new goals have been given to Titan's management team and we believe they are attainable and we look forward to accomplishing these milestones,” the firm said. “Titan's future looks bright as we continue to focus on our current locations while we pursue our global vision. We will hopefully complete more acquisitions this summer, which could increase these above ranges yet again, especially into 2012.”
The revised goals incorporate sales and earnings from the Goodyear Latin American farm tire business Titan acquired in April and higher-than-expected North American revenue.
Titan expects the Goodyear acquisition, completed April for $98.6 million, to generate $400 million in sales over the coming 18 months, Taylor said.
The company's acquisition of Goodyear's European farm tire assets is still pending as Goodyear works to complete a social plan with workers at the Amiens, France, plant that is the key asset in the deal. Goodyear's plan to sell the plant depends on its ability to phase out consumer tire production there.
In its first quarter 10-Q filing with the Securities and Exchange Commission, Goodyear said: “The European portion of the transaction, which has not yet been completed, is subject to the exercise of a put option by us following completion of a social plan related to the previously announced discontinuation of consumer tire productionà.”
The 10-Q filing also stated the European farm tire business has suffered operating losses recently of sufficient size to affect the operating income of Goodyear's European/Middle East/Africa business unit on a scale of $20 million to $25 million.
Regarding the Latin America deal, Taylor said Titan has announced price increases for Goodyear farm tires in June and July that total 16 percent in order to recoup some revenue lost to Goodyear's failing to raise prices in the months prior to the deal's closing.
Taylor also said Titan faces some additional investments in new molds and tire development because Goodyear had not renewed the farm tire business's product portfolio sufficiently in the past few years. Goodyear originally decided to sell the business in June 2009.
In addition, he said the business's ability to export products was hampered by a paperwork snafu that limited the value of the company's exports. Titan's awaiting revisions.
In North America, Titan has hired back all of the employees laid off in 2009 at its Bryan, Ohio, OTR tire plant and is well on its way of doing the same at the Freeport, Ill., farm tire plant.
“We're trying to expand as rapidly as we can,” Taylor said, addressing rising demand and supply shortages issues.
Titan International generated record quarterly income from operations in the quarter ended March 31 on record sales of $280.8 million.