FINDLAY, Ohio—Cooper Tire & Rubber Co. suffered double-digit declines in sales, operating and net profit for the second quarter, but operating profit for the first six months of 2013 was nearly 16 percent higher than the same 2012 period.
Sales for the quarter were approximately $884 million, Cooper said, a decrease of 16.5 percent from 2012. Operating profit fell 27.4 percent to $69 million. Net income attributable to Cooper Tire declined more than 31 percent to $35.5 million, the company said.
Cooper's unit sales declines were precipitous. The firm's passenger tire shipments in the quarter fell 11.3 percent, while overall market shipments were up 3.2 percent.
Cooper's light and medium truck tire shipments were off 21.2 and 28.3 percent, respectively, while market shipments were up in both segments, 2.6 and 4.1 percent.
Cooper explained that the second quarter operating profit comparison was impacted by a number of one-time items unique to that period in both 2012 and 2013.
Last year, operating profit from the quarter included a pre-tax gain of $7 million, which was related to the curtailment of a pension plan within Cooper's United Kingdom operations. This was partially offset by $2 million in start-up costs for the tire maker's manufacturing business in Serbia.
In addition, during the second quarter of 2013, results included $7 million in higher costs related to the company's pending merger with India's Apollo Tyres Ltd., which Cooper said included "increased accruals for stock-based liabilities of $3 million, reflecting the stock price appreciation following the acquisition announcement." These non-recurring items accounted for $12 million of the $26 million year-over-year decline in operating profit for the quarter, Cooper said.
Despite decreases in several key financial areas during the second quarter, operating profit for the first six months of 2013 reached $165.8 million, compared with $143.1 million for the same period in 2012. Excluding several non-recurring items from both periods, operating profit in the first six months of 2013 was $4 million higher than during the same period last year.
"Clearly, the big news in the second quarter was the pending merger with Apollo, a transaction that, subject to customary closing conditions, will create a combined company with approximately $6.6 billion in total sales and a strong presence in high-growth end markets across four continents," said Roy Armes, Cooper chairman, president and CEO.
"…With regard to Cooper's second quarter results, the period was one of challenge for the economy, the tire industry and Cooper as we continued to navigate through a tough business environment," Armes continued. "We are pleased with the initial reaction to the pricing changes we made toward the end of the quarter, but more remains to be seen as we enter the third quarter."
In the outlook section of its report, Cooper said it anticipates third quarter raw material prices will decline by about 4 percent sequentially, compared with the second quarter.
"Looking ahead to the remainder of the year, we have much to accomplish with respect to the pending merger with Apollo, and we look forward to the opportunities the combined company will have to compete and grow within the global tire industry long-term," Armes said.
"Regarding our near-term view for Cooper, we continue to be cautious about volumes as weak global economic conditions and sluggish tire demand are expected to continue."