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Bandag Profits Squeezed by Weak Markets, Higher Costs

July 25, 2001

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Bandag Inc. posted second quarter earnings of $9.5 million, down 46% from second quarter 2000.
Sales for the quarter were $244.8 million, down 2% from a year ago.
Worldwide, the company’s tread volume was down 4.4% -- an improvement over the 10% drop in first quarter volume, noted Chairman and CEO Martin Carver.
“Bandag’s tread volume showed improvement in most geographic areas,” he said, “particularly in North America, our largest market. However, there continues to be weakness in Europe and Latin America.”
An April price increase partially offset lower volume and higher raw material costs in North America, but higher costs in other areas, particularly Brazil and Europe, continuesd to squeeze profits.
Tire Distribution Systems, Bandag’s distribution subsidiary, had sales for the quarter of $104.8 million, about the same as second quarter 2000., but reported a $902,000 loss compared to a pre-tax profit of $1.88 million a year ago. Carver said operating margins were reduced by competitive pricing pressure on new truck tires sales and lower unit sales of higher-margin retreads.

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