FINDLAY, Ohio—Cooper Tire & Rubber Co. is "cautiously optimistic" about business in the fourth quarter despite what it calls a "challenging" operating environment and business conditions that will affect fourth-quarter profits negatively.
"It is very difficult at this point to accurately assess the current and future strength of global tire markets, particularly in North America, where the impact of higher gasoline prices, declining consumer confidence and the lingering impact of hurricanes in Florida, Mississippi, Louisiana and Texas cannot yet be measured," said Thomas Dattilo, chairman, CEO and president.
Cooper is operating its North American plants on reduced production schedules as it works to cut inventories, which the company described as high in certain product categories. The company was forced to scale back production during the quarter because of raw material constraints following supplier shutdowns in the wake of Hurricane Rita.
The reduced production schedules "obscure the progress we are achieving in production process changes and manufacturing efficiency," Dattilo said, and will impact fourth-quarter operating profit negatively.
Cooper said it faces challenges in its broadline sales in North America, and uncertainty in the economies in North America and key regions around the world make it difficult to forecast. Cooper is forecasting higher raw material prices and energy costs, even though materials costs have stabilized following the hurricane season.
Dattilo said Cooper expects to see operating improvements in the first quarter of 2006 on the strength of increasing productivity and manufacturing efficiency, as well as the inclusion of results from the newly formed joint venture companies in China.