Cooper's net income rises after unusual 2013

FINDLAY, Ohio—Cooper Tire & Rubber Co. experienced increased net income for the full year and fourth quarter of 2014 after unusual circumstances impacted its 2013 financials.

The tire maker reported net income at $214 million, up from $111 million in 2014 for the year. Those results included a gain of $56 million from the sale of the firm's 65 percent stake in its Chinese joint venture, Cooper Chengshan Tire Co. Ltd.

For the fourth quarter, net income increased to $82 million compared to $20 million in 2013. Net sales, however, decreased 5 percent to $820 million from $861 million in 2013. The firm attributed the decrease to lower volume of about $61 million related to the absence of CCT for part of the quarter.

Net sales for the full year decreased slightly to $3.42 billion compared to $3.44 billion in 2013.

Cooper Tire cautioned that its 2013 results are not representative of the business under normal circumstances. In 2013, labor actions at its CCT joint venture resulted in lower production and shipments, higher costs and lower volume associated with shipping inefficiencies related to ERP system implementations. That, the tire maker said, as well as costs related to its now terminated merger agreement with Apollo Tyres Ltd., had a negative impact on its financials.

The firm sold its 65 percent stake in CCT in November 2014 for about $262 million, which was not included in its fourth quarter results.

“Despite the relative weakness in our international operations in the fourth quarter, we had a very good year in 2014, particularly in our Americas business,” Roy Armes, chairman, CEO and president of Cooper Tire, said in a Feb. 23 conference call discussing the firm's results.

Armes added that the firm expects tire markets to continue to grow modestly in North America during 2015. Sales for the firm's Americas Tire Operations segment increased 10 percent to $689 million from $628 million in the fourth quarter. Unit shipments increased 8 percent compared to 2013.

Sales for the full year increased 4 percent to $2.59 billion, from $2.49 billion.

The firm's International Tire Operations segment experienced a decrease in net sales to $191 million for the quarter, compared to $283 million in 2013. This decrease also was attributed to the $61 million in lower volume as a result of the CCT sale.

Full year sales declined 8 percent to $1.14 billion, from $1.24 billion.

Armes said Cooper is looking for investment opportunities in Asia to replace the volume lost in the sale of its CCT joint venture. Its options include an agreement with another supplier; a joint venture; an acquisition; increasing capacity at its other facilities; buying a facility and running it; or building a new plant.

The firm has budgeted between $205 million and $215 million for capital expenditures for 2015. Armes said this kind of investment is appropriate considering the strength of Cooper's balance sheet and will be geared toward enhancing automation and mix shift. The executive said the firm will be spending more on molds.

Armes also stressed that Cooper Tire is “not for sale” in the aftermath of its failed merger attempt with Apollo.

“We're not talking with anybody, and we're not going to speculate on any kind of things with regard to whether or not somebody is interested in us or not. We're just not for sale,” Armes said. “However, I have said in the past, everything is on the table here if it creates the kind of value that we think is deserving of our shareholders.”