Shares of giant tire supplier Titan International, Inc. (NYSE: TWI) fell as much as 14.8% on Wednesday after the company announced worse-than-expected earnings. The stock recovered slightly in the morning, and by 12:30 p.m. EDT, it was only down 10.7%.
Revenue only fell by a half-million dollars to $307.3 million in the fourth quarter, coming in ahead of the $305.5 million analysts had expected. And while net loss improved from $57.4 million a year ago to $14.1 million, adjusted loss per share of $0.24 was worse than the $0.09 loss Wall Street anticipated.
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Management also announced that market improvements have led the company to abandon the idea of selling the ITM S.p.A. business, which could have resulted in more than $100 million in proceeds. Long term, this may be the right move, but it's leaving the balance sheet more stretched than it would have been had a sale been completed.
The core challenge is that investors are hoping for a turnaround in Titan International's business and it's taking longer than hoped. Management thought last summer was the bottom for the market, but the decline in revenue showed that a recovery isn't quite taking hold. In the long run, there could still be a big opportunity for growth given the global economic recovery and slight upturn in some commodities. But today the signs of improvement weren't as strong as hoped and that's why shares are falling.
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