FINDLAY, Ohio—Cooper Tire & Rubber Co. reported a net loss and 78.5 percent lower operating earnings for the quarter that ended Sept. 30, as sales slid 24 percent to $832.4 million.
The earnings report was delayed as a result of the turmoil of the planned merger with India's Apollo Tyres Ltd., which in the fourth quarter had begun to unravel.
The net loss for the quarter was $168,000, down from net earnings of $74.1 million in the third quarter of fiscal 2012. Operating profit slid to $27.9 million,
Cooper attributed the lower earnings to costs associated with work stoppages at its Cooper Chengshan Tire joint venture in China, unfavorable pricing and product mix and reduced logistics and manufacturing efficiencies. The net loss included the impact of an 84 percent tax rate, which Cooper said was caused by $8 million in "discrete items."
Cooper experienced sales drops both domestically (down 22.4 percent) and internationally (down 35.7 percent). On a unit shipment basis, Cooper lost ground to the industry in the U.S., as its consumer tire shipments were off roughly 14 percent through nine months, vs. industry-wide shipments growth of 6 to 7 percent, Cooper noted.
Cooper's truck tire shipments, which were impacted by the turmoil at Cooper Chengshan, plunged 52 percent in the quarter and 39 percent for the nine months.
Despite the drops in the third quarter, Cooper said it expects to report positive operating and net income for the fourth quarter and second half of 2013. The earnings report is expected in mid-March.
"With the (Apollo) merger agreement terminated and operations returning to normal at (Coooper Chengshan Tire), we are resuming financial reporting and moving our business forward," said Cooper Chairman, CEO and President Roy Armes.
"As expected, issues surrounding the merger had a significant negative impact on our third quarter results, and we anticipate some carryover of these negative impacts to a lesser degree in the near term."
Nonetheless, Armes said Cooper's business model "remains resilient," and the company expects to finish the year with a strong balance sheet.
For the first nine months of 2013, operating profit fell 28.9 percent to $193.7 million. Net income attributable to Cooper fell 38 percent to $91.4 million, and sales dropped 17.8 percent to $2.58 billion. Again, the sales drops were felt both in North America (down 18.6 percent) and internationally (down 22.3 percent).