FINDLAY, Ohio—Cooper Tire & Rubber Co. reported increases in net income and net sales for the second quarter that ended June 30.
Net income was $38 million compared with $35 million last year. Net sales were $889 million, an increase of 1 percent from $884 million in 2013.
Operating profit was up for the quarter as well, at $77 million compared with $69 million for the same period last year. The 2013 operating profit included $7 million in costs related to the then-pending merger with Apollo Tyres, which did not occur.
“We continued our strong performance in what is usually a seasonally weak quarter, posting very good volume growth in most geographic regions. Pricing decreased, mainly driven by lower raw material costs, but the 10 percent global unit growth, along with our focus on cost reductions, helped us exceed last year's operating margin,” said Roy Armes, chairman, president and CEO.
In North America, second quarter net sales rose 3 percent to $639 million from $623 million in 2013 and unit shipments increased 9 percent. The company also experienced improved efficiencies from its new ERP system.
Internationally, net sales declined 8 percent to $327 million from $353 million in 2013, as unit volume rose 5 percent. Higher unit volume in Europe was the result of increases in Western Europe, particularly in the United Kingdom, the Findlay-based firm said, which partially were offset by weakness in Russia and Eastern Europe. Higher unit volume in Asia included growth in passenger car tires, as well as truck and bus radial tires.
Looking forward, Cooper anticipates that third quarter raw material costs will be roughly flat sequentially, after raw material costs declined approximately 1 percent in the second quarter. The long-term raw material outlook is for costs to generally trend higher, with periods of volatility.
Capital expenditures for 2014 are expected to be between $175 million and $185 million, which is up slightly from the previous estimate as the company expects to accelerate plans to convert production capabilities to meet increased demand of higher margin tires.
“The third quarter typically is our seasonally strongest quarter, and we expect to build on our momentum as raw material costs remain favorable and demand looks solid. We expect global tire markets will remain highly competitive, and overall economic conditions will continue to show modest improvement. Our new product lineup and demonstrated ability to execute our strategic plan positions us well to take advantage of growth opportunities worldwide. We continue to expect to meet or exceed industry unit volume growth in our largest markets this year,” Armes said.