FINDLAY, Ohio—Relatively strong operations by its Americas business unit in the quarter ended March 31 helped Cooper Tire & Rubber Co. overcome $15 million in one-time costs to report increased net sales and operating profits on par with 2018.
Cooper's first quarter operating income was virtually unchanged from 2018 at $26.4 million, while sales increased 2.9 percent to $619.2 million. Net income sank 15.8 percent to $6.98 million.
Cooper's earnings in the quarter were impacted negatively by $10 million in costs related to the imposition of import duties on medium truck/bus tires imported from China as well as $5 million of charges related to restructuring moves the company is making in Europe.
The duties relate to Cooper's imports of Cooper- and Roadmaster-brand truck tires from its Qingdao Ge Rui Da Rubber Co. Ltd. joint venture in Qingdao, and from an off-take agreement with Prinx Chengshan (Shandong) Tire Co.
Cooper President and CEO Brad Hughes noted that the operating profit was "higher than we expected due to stronger-than-anticipated performance in North America and Asia."
Cooper's Americas segment delivered an operating profit of $38.8 million, up 24.1 percent from 2018 despite the $10 million impact of TBR tariffs in the period this year, the company said. Cooper attributed the improvement to price/mix improvements and reduced manufacturing and product liability costs; offsetting the improvements were higher raw materials and import duties costs.
Sales were up 6.1 percent to $514.9 million—the third consecutive quarterly gain—on the positive effects of a favorable price/mix component. Unit volumes were unchanged: up in North America but down in Latin/South America, Cooper said.
Cooper's international business unit reported an operating loss of $1.33 million on 10.8 percent lower sales of $143.8 million.
Despite the declines, Hughes said the company's Asia business "performed better than expected in what continues to be a challenging economic environment."
Third-party sales were up in the region, but this was more than offset by lower intercompany shipments to North America from China.
For the rest of 2019, Hughes said Cooper continues to expect "modest global unit volume growth for Cooper in 2019 and full year operating profit margin to improve compared with 2018," based in part of management's belief that "underlying macro-conditions will support growth in tire demand, particularly in the U.S.
"We are confident that our strategic plan remains the right path to achieve our goals and help drive shareholder value," he said.