FINDLAY, Ohio—Cooper Tire & Rubber Co. reported operating and net losses in the quarter ended March 31 as sales fell 14.1 percent to $532 million.
Due to the economic impact of the pandemic, Cooper said it is withdrawing its previously announced full-year 2020 outlook, which was issued on Feb. 24.
"We cannot, at this time, predict the extent or duration of the pandemic and its impacts on our financial and operating results for the full year," Brad Hughes Cooper Tire CEO and president, said in a statement. "Given that the coronavirus will likely have a significant impact on the second quarter, we believe it will be the most challenging quarter of our year for operating profit."
Cooper reported operating and net losses of $6 million and $12 million, respectively, for the quarter ended March 31. That compares with an operating profit of $26 million and net income of $7 million for the year-ago period.
Operating results included about $11 million of restructuring charges related to the transition at the company's now wholly owned manufacturing facility in Mexico.
Unit volume decreased 15.8 percent compared with the first quarter of 2019.
"We entered this challenging period caused by the global pandemic with a strong team and strategic plan, a solid cash position and borrowing capacity, appropriate inventory levels and a flexible global manufacturing footprint," Hughes said. "Cooper was tracking well against our strategic initiatives and previously stated financial goals and had considerable momentum.
"In response to the coronavirus, we temporarily shut down our manufacturing plants for various periods of time while we continued to operate our distribution centers around the world. At the same time, we took several actions to improve liquidity."
In recent weeks, Cooper put factories in China, the U.S. and Serbia back in operation, and said they will continue to ramp up as conditions improve. Plants in England and Mexico remain closed temporarily.
"Overall, we believe Cooper is in a good position to benefit when the economy recovers," Hughes said. "Over the past two years, we have transformed our company into a consumer-driven organization with Cooper products now more available where consumers want to buy tires."
First-quarter net sales were impacted negatively by $98 million of lower unit volume and $4 million of unfavorable foreign currency impact, partially offset by $15 million of favorable price and mix.
Cooper attributed the operating loss to $30 million of higher manufacturing costs, $18 million of lower unit volume, $6 million of higher restructuring costs and $2 million of higher other costs, which partially were offset by $12 million of favorable raw material costs, $6 million of favorable price and mix, and $6 million lower SG&A expenses.
Cooper's first quarter raw material index decreased 6 percent from the first quarter of 2019.