FINDLAY, Ohio (Feb. 27, 2012)—Cooper Tire & Rubber Co. suffered a 13.3-percent drop in fiscal 2011 operating income as the rise in cost of products sold outstripped the company's 16.8-percent rise in sales.
Operating income for the year ended Dec. 31 slipped to $163.3 million as sales jumped to $3.97 billion, Cooper reported, dropping the operating ratio nearly one and a half points to 4.2 percent.
Net income, on the other hand, shot up 64.5 percent to $269.6 million on the one-time positive effects of the release of a valuation allowance against U.S.-deferred tax assets that essentially doubled the net result.
For the fourth quarter, Cooper reported a 9.2-percent gain in operating income to $59.7 million on 13.7-percent higher sales of $1.05 billion. The net income more than quadrupled to $214.7 million, thanks to the valuation allowance gain.
Cooper's North American Tire operations reported lower segment profits in both the quarter and fiscal year despite higher sales in both periods. Fourth quarter earnings sank 17.4 percent to $34.9 million on 16.2-percent higher sales of $777.5 million, and full year profits fell 40.8 percent to $77.4 million on 17.9-percent higher sales of $2.86 billion.
Cooper blamed the earnings drops on higher raw materials costs and increased manufacturing costs related primarily to its efforts to restart production at Findlay after the late November lockout of the plant's unionized workforce.
Cooper cited stronger price/mix and higher unit sales for the revenue gains. Fourth quarter light vehicle unit sales for the North American segment increased 4.1 percent over the 2010 quarter and compared favorably with the U.S. industry shipments, which fell 3.4 percent, as reported by the Rubber Manufacturers Association.
In particular, Cooper reported 49-percent higher UHP tire sales.
For the full year, Cooper reported 0.4-percent higher light vehicle tire shipments, compared with an industry drop of 2.2 percent.
Looking at 2012, Armes said raw materials costs, which are “inherently volatile,” have shown signs of stabilizing at elevated levels. Costs in the third quarter of 2011 represented an all-time high on Cooper's raw material index, and they remain elevated at near record highs.
In addition, Armes lauded Cooper's manufacturing facilities for adjusting to very fluid conditions.
“The successful efforts we have made to improve our cost structure and increase the flexibility of our footprint over the last few years are evident in our results, and we believe further improvement can contribute meaningful results over the next couple of years.”