By Liz White, ERJ staff
Findlay, Ohio-Cooper Tire & Rubber Co. continues â€œto explore the sale of its Cooper Standard Automotive unitâ€ and stands by its earlier statement that the sale, â€œwould be finalised near the end of the third quarter,â€ said president and chief executive officer Thomas Dattilo, during a 22 July webcast on the company's second quarter results.
The tyre and automotive parts supplier's announcement that the Cooper Standard business was for sale resulted in, â€œa lot of interested parties,â€ but Dattilo said there were, â€œno additional moves or announcements at this stage.â€
Nevertheless he agreed when questioned that to achieve a sale in the third quarter would mean an announcement would have to be made soon-within the next month.
Cooper will use the proceeds of any sale to invest in the tyre business and pay off some of its $807 million debt, said chief financial officer Phil Weaver.
Looking at Cooper Standard's performance during the quarter, Dattilo pointed out that some of its competitors have gone bankrupt, others have been sold or are up for sale. This has repercussions in the business. One of them for Cooper Standard may have been to retain business with DaimlerChrysler, which the car maker had earlier announced it would move elsewhere.
Any effects from the announced sale of GDX Automotive, the troubled automotive profiles unit of GenCorp, would be, â€œhard to tell,â€ said Dattilo. â€œGDX is going to a financial buyer who have an approach to the business which requires them to make money,â€ the Cooper chairman added.
Cooper Standard Automotive's second quarter new sales rose 17 percent to $485 million. The North American contribution was up 14 percent, largely via ramp-up of new business, adding about $50 million, and allowing Cooper Standard to, â€œsignificantlyâ€ outpace the 2 percent growth in light vehicle production.
Outside North America, a 24 percent sales rise came from higher volumes, new business and the positive impact of foreign exchange rates.
Second quarter operating profit for Cooper-Standard Automotive was $44 million, up 72 percent compared to last year. During the quarter, Cooper-Standard Automotive was awarded new contracts for $72 million for production during the next 5 years, bringing total new business for 2004 to $98 million.
Dattilo emphasised that raw material prices are key factor in the total Cooper Tyre & Rubber business at present. NR prices have levelled off slightly and even dropped, he said, but SR prices have risen 35-40 percent recently. Steel and petroleum prices are high with the latter affecting carbon black and SR prices, Dattilo commented, and supplies of polyester fabric are constrained. Raw material price rises will have a total impact of $20-25 million in the third quarter, he said.