FINDLAY, Ohio—Cooper Tire & Rubber Co. suffered double-digit drops in operating income for the quarter and nine months ended Sept. 30, while reporting 0.5 percent higher sales in the quarter.
Cooper attributed the third quarter earnings decline, 26.7 percent to $81.2 million, to "unfavorable" raw-materials costs ($15 million impact) and higher manufacturing ($12 million) and product liability costs ($3 million).
Sales inched up to $737.7 million, resulting in a four point drop in the operating margin to 11 percent. Net income was off 11.5 percent to $55.4 million.
In light of the drop in earnings and more headwinds in the fourth quarter, Brad Hughes, Cooper Tire president and CEO, stressed the company's positives, noting that Cooper expects to achieve volume growth in the fourth quarter as well as acceptable operating earnings based on price increases implemented recently.
Regionally, Cooper suffered a 30.1 percent drop in operating profits in the Americas, to $87.4 million, on 0.5 percent higher sales of $628.7 million. Volumes increased in North America but fell in Latin America, Cooper said.
In comments to financial analysts during a conference call, Hughes noted that the ongoing consolidation in the U.S. tire distribution industry represents a growth opportunity for Cooper, which is in the midst of a "dealer conquest program."
Hughes said new dealer enrollments have more than doubled versus 2017, meaning Cooper brands are available at more points of sale. "Making tires more available to consumers where they want to shop … is one of our key strategic goals," he said.
Cooper's international operations nearly tripled their operating profit, to $6 million, on 0.6 percent lower sales of $162.4 million, as unit volumes were off in Europe and Asia.
For the nine months ended Sept. 30, Cooper's operating income fell 44.5 percent to $140.4 million on 2.9 percent lower sales of $2.04 billion, resulting in a five point drop in the operating margin to 6.9 percent.
Cooper did not quantify its sales or earnings expectations for the full fiscal year.