FINDLAY, Ohio—Cooper Tire & Rubber Co. suffered double-digit drops in operating and net income for the quarter ended March 31, reflecting lower unit volume and costs associated with reduced manufacturing, the company said.
Operating income dropped 54.4 percent to $26.5 million on 6.5 percent lower sales of $601.5 million, cutting the operating margin nearly five percentage points to 4.4 percent. Net income fell 72.9 percent to $8.29 million.
President and CEO Brad Hughes said Cooper expects its performance in the months ahead to be "choppy" as the tire business "navigates through current weak U.S. demand and raw material prices inch up.
"However," he added, "we believe that underlying macroeconomic factors support improvement in tire industry demand within the second half of this year."
Cooper, he said, expects that "together with our initiatives to increase unit volumes and reduce costs, will drive improvements in our operating profit in the second half of the year."
A bright spot for Cooper was its radial truck and bus tire business, volume of which was up 25 percent over the 2017 first quarter and "well above" the industry trend. Cooper said its relaunch of a Cooper-branded truck tire line been very well received.
Hughes also said Cooper was encouraged by the profitability of its international segment, which accounted for nearly 27 percent of Cooper's corporate sales, up from 22 percent a year ago, reflecting 14 percent revenue growth despite a dip in unit volume.
Operating income for the Americas segment fell nearly 56 percent to $31.2 million, on 8.7-percent lower sales of $485.4 million, Cooper said. The company attributed the revenue drop to lower unit volume ($30 million), unfavorable price and mix ($19 million), offset slightly by a favorable foreign currency impact ($3 million).
Segment unit volume decreased 5.6 percent from 2017, with unit volume decreases in both North America and Latin America.
Cooper's first quarter light vehicle tire shipments in the U.S. decreased 6.4 percent, compared with an industrywide drop of 1.9 percent, according to U.S. Tire Manufacturers Association shipment figures for light vehicle tires in the U.S.
The U.S. market performance reflected weaker than expected sellout volume and corresponding pricing and promotional activity, Cooper said.
During the quarter, Cooper repurchased 469,581 shares of its common stock at an average price of $33.15 per share, in line with the share repurchase program announced in August 2014 and extended a year ago. The company has repurchased 15.2 million shares at an average price of $34.38 per share since mid-2014.