FINDLAY, Ohio—Cooper Tire & Rubber Co. suffered double-digit drops in operating income for the quarter and year ended Dec. 31 as the company dealt with elevated costs related to raw materials and manufacturing, as well as reduced unit sales and revenue.
Fiscal 2017 operating income fell 29.3 percent to $271.7 million on 2.4 percent lower sales of $2.85 billion, dropping the operating margin nearly four points to 9.5 percent.
Net income fell 61.6 percent to $95.4 million, as the company recorded $68 million of "discrete" tax items in the fourth quarter related to the impact of U.S. tax reforms.
Despite the earnings drops, Cooper President and CEO Brad Hughes said Cooper management was "pleased" to have ended 2017 with an operating margin of 9.5 percent, which he said was "near the high end" of the 8 to 10 percent guidance range the company issued in the fourth quarter.
"This is noteworthy," he said, "given the pricing and volume challenges within the industry throughout the year, and the significant impact of higher raw material costs."
For 2018 Cooper expects unit volume growth over 2017 and an operating ratio in the 9 to 11 percent range, based on revenue-growth initiatives, the reclassification of certain pension costs and "underlying macro-conditions that favor tire industry growth," Hughes said.
The company didn't disclose a specific revenue forecast.
In the fourth quarter, operating income plunged 55.5 percent to $46.8 million on 3.4percent lower sales of $757 million. Unit sales were off 1.9 percent, reflecting a drop of 6.2 percent in the Americas, which was partially offset by a 15-percent unit volume growth in the International segment.
The firm reported a net loss of $42.2 million due in large part to the tax-related charges.