FINDLAY, Ohio (March 3) — Standard & Poor´s Rating Services has put Cooper Tire & Rubber Co.´s corporate credit rating on CreditWatch with negative implications.
In October the rating group downgraded Cooper to "junk" status — a rating that can make borrowing more expensive for a company. With the latest action, Cooper´s rating remains BB+ but with the CreditWatch.
In the action, S&P cited the tire maker´s weak operating earnings and cash flow generation as well as the "likelihood that future financial results will fall short of previous expectations." S&P also noted that sales in the fourth quarter grew 6 percent, but operating income fell 18 percent. For the year, sales increased 4 percent yet operating income dropped 58 percent.
"We expect Cooper to see some benefits from improved manufacturing efficiencies and increased sales of its high-margin products," said S&P analyst Martin King. "But it is unclear whether the improvements will be sufficient to strengthen operating results so that the company´s credit protection measures are consistent with the current rating."
Cooper did not provide guidance for 2006 because of the many challenges and uncertainties it expects to face this year, S&P said in a news release.