FINDLAY, Ohio (May 3, 2012)—Cooper Tire & Rubber Co. reported a 48.1-percent improvement in operating profit for the quarter ended March 31 on the positive effects of improved price and mix.
Cooper's earnings improved to $47.7 million despite lower sales volumes, higher manufacturing and business and raw materials costs. Sales rose 9.1 percent to $984.3 million despite lower unit sales in North America and Europe.
Net income attributable to Cooper rose 37.6 percent to $21.6 million, or 2.2 percent of sales.
Cooper CEO Roy Armes noted this is Cooper's 11th straight profitable quarter, which he termed a “tribute to the resiliency of our business model.
“While demand has been sluggish for the industry, our new products continue to do well as we exceeded industry growth in many product lines,” he said. “We continue to believe that pent-up demand for broadline tires exists, although it is difficult to predict exactly when that demand will manifest.”
Armes said Cooper expects costs, driven by raw materials, to continue rising throughout the second quarter by as much as 5 to 7 percent.
Cooper said sales were up because of $71 million in improved price and mix contributions, which offset $8 million of higher raw material costs. Higher manufacturing costs, including $29 million related to the labor situation at the company's plant in Findlay, decreased results by $31 million.
Selling, general and administrative costs increased by $9 million as the company invested in expanding distribution networks and promoting Cooper brands. Startup costs related to the manufacturing operations in Serbia were $3 million.
In North America, Cooper achieved operating profit of $22.8 million, an increase of 6 percent. Sales rose 8.3 percent to $697.5 million despite 3-percent lower unit sales. Overall, the company's light vehicle tire shipments paralleled the replacement market's drop of 5.8 percent in the quarter, based on Rubber Manufacturers Association data, Cooper said.
Internationally, Cooper's operating earnings rose 63 percent to $32.6 million on 11.3-percent higher sales of $404.5 million. Shipments in Asia, driven by increased truck/bus radial and premium car tire sales, rose 8 percent while shipments in Europe dropped 10 percent.
Commenting on the rest of fiscal 2012, Armes noted there are “continued opportunities” for the company to increase shareholder value, including building on the momentum from new product introductions and driving cost savings through operational efficiencies.
“We have confidence that successful execution of initiatives aligned to our plan will move our business forward,” he said, “despite the volatile environment in which we operate. We remain optimistic about our future.”