Retread tire manufacturer Bandag said its profits dropped off sharply in 2002, largely as the result of new accounting standards it adopted last year.
Muscatine, IA-based Bandag said its net income in 2002 fell to $2.8 million on sales of $900.5 million, compared to net income of $43.8 million on sales of $949.3 million in 2001. Most of that profit decline came from a $47.3 million charge Bandag said it took last year to switch to new accounting standards.
For the fourth quarter of 2002, Bandag reported net income of $17.5 million on sales of $231 million, compared to net income of $17.4 million on sales of $246.3 million in the same period in 2001.
Chairman & CEO Martin Carver noted that Bandag's cost of operations may be trending upward in 2003. He said raw material costs, which had remained stable through the first nine months of 2002, increased significantly in the fourth quarter, with the company's North American business unit alone experiencing a 4% increase.
He also noted that Bandag's U.S. tread rubber volume, which accounts for the majority of its North American revenues, rose nearly 7% in the fourth quarter in comparison to the same period in 2001. That came mainly as a result of North American retread tire dealers buying products ahead of a January 1 price increase announced during the fourth quarter.