QUINCY, Ill. (July 30, 2012)—Goodyear and Titan International Inc. have revised their off-take production agreement covering the production of bias-ply light and medium truck tires by Titan for Goodyear in South America, allowing Titan to sell these products at market value.
The off-take deal dates back to Titan's April 2011 acquisition of Goodyear's Latin American farm tire business. The three-year agreement called for Titan to make truck tires for Goodyear at the Sao Paulo, Brazil, plant at predetermined “below market” prices.
Titan said it booked a $26.1 million gain in earnings by taking a liability in that amount off the books. Sales under the agreement generated $96.9 million for the six months ended June 30, compared with $63.3 million in 2011, Titan said.
Technically, Titan and Goodyear terminated their supply agreement from 2011 and entered into a new agreement under which Titan will sell these products directly to third party customers and pay a royalty to Goodyear.