Findlay, Ohio - Cooper Tire & Rubber Co. posted a 28.3-percent gain in net sales in the third quarter - primarily from its Chinese acquisition - yet the firmÂ´s net loss and loss from continuing operations steepened significantly.
For the third quarter, Cooper posted a net loss of $25 million versus a net loss of $840 000 for the same period in 2005. The loss from continuing operations also deepened to $23.4 million from $1.09 million a year ago. Sales in the period rose to $715.8 million from $557.8 million in 2005.
Cooper said the operating losses were the result of $10 million in unabsorbed overhead from reduced production levels; $5 million in severance costs relating to the departure of former Chairman and CEO Thomas Dattilo; and $2 million in restructuring expenses relating to the closure of the companyÂ´s Athens, Georgia, plant and a management reorganisation in Europe.
Cooper said its sales gains were primarily attributable to its February purchase of Cooper Chengshan (Shandong) Passenger Tire Co. Ltd. and Cooper Chengshan (Shandong) Tire Co. Ltd. in China. Improved sales volume in Europe and improved product pricing and mix in North America and Europe also contributed to the increase in revenue.
The company said its North American tyre segment was successful in reducing inventory by 1.3 million tyres during the quarter, generating $53 million in cash.
For the nine months ended Sept. 30, CooperÂ´s sales rose 22.4 percent to $1.94 billion. The firmÂ´s loss from continuing operations deepened to $48.3 million versus $8.55 million a year ago as did the net loss, falling to $50.9 million from $2.51 million in 2005.
"This was a tough quarter with some of the operating challenges and continued dramatic raw material cost increases we faced," said Byron Pond, interim CEO. "It was made even tougher with some of the unusual expenses we incurred. But excluding those non-recurring items, you can see signs that we are headed in the right direction."
From Rubber & Plastics News (A Crain publication)