FINDLAY, Ohio (Aug. 3) — Facing "extraordinarily" weak replacement demand in North America and high raw material costs, Cooper Tire & Rubber Co. posted an operating loss of $25.9 million in the second quarter.
Cooper reported a net loss of $20.7 million on sales of $624.8 million. The firm´s sales were up 22 percent, with most of the increase driven by Cooper Chengshan (Shandong) Passenger Tire Co. Ltd. and Cooper Chengshan (Shandong) Tire Co. Ltd. in China, which contributed $110 million in sales during the quarter.
Improved product pricing and mix in North America and Europe also contributed about $36 million to sales.
But weak replacement demand in North America and high inventories led to a company decision to reduce production during the quarter, resulting in $8 million in unabsorbed overhead expense. The company also in the quarter announced its intention to close its Athens, Ga., retread products and race tire plant, contributing $8 million in restructuring charges.
For the first half of the year, Cooper posted sales of $1.22 billion — up 19 percent — and a net loss of $25.9 million. Cooper also posted an operating loss of $30 million in the half.
In Cooper´s North American Tire operations, sales rose 1 percent to $463.4 million as the tire maker gained share in several categories. The unit posted an operating loss of $29.9 million in the quarter and $35.8 million in the half. Cooper attributed the losses to restructuring charges, plant shutdowns, lower unit sales and higher raw material prices. These factors were only partially offset by $21 million in improved pricing.
"The replacement tire market conditions in North America remained challenging in the second quarter," said interim CEO Byron Pond. "Replacement tire demand was soft, manufacturers´ inventories were increasing and raw material prices continued to escalate relentlessly. In this tough environment, we focused on customer service and sales of our premium products and were able to gain market share and improve our overall product and customer mix."