Findlay, Ohio -- Cooper Tire & Rubber Co. posted a second quarter net loss of $22.2 million, citing higher raw material and utility costs and weak demand in North America.
The tyre maker posted record sales of $772.9 million for the quarter ended June 30, a 5.9-percent rise from 2007. The higher sales were driven by pricing and improved mix that were partially offset by decreased tyre unit volumes in North America.
Raw material shortages also caused Cooper to temporarily reduce North American production during the quarter. This curtailment triggered $13 million of costs for the quarter, primarily related to unabsorbed overhead.
CEO Roy Armes said the company is still committed to the long-term goals established in its strategic plan.
For the first six months of 2008, Cooper reported a record $1.45 billion in net sales, but the recorded net losses were $20.5 million during the same period compared with net income of $38.3 million in 2007.
In North America, the tyre maker posted sales of $547.5 million for the quarter, a 2.7-percent jump from a year ago caused by increased pricing and improved product mix, offset by 13 percent lower volumes. The lower volumes came from the broadline tyre area, Cooper said. However, the company's market penetration of light truck tyres increased during the quarter as the Cooper brand increased its market penetration as compared to the Rubber Manufacturers Association's shipments report.
Segment losses for the North American tyre division were $21.9 million, down from earnings of $20.7 million in 2007.
Cooper said raw material costs were partially offset by price hikes of $32 million. Other negative factors in North America that impacted results included product liability expenses that jumped $3 million from the same period last year and the cost of maintenance projects during production shutdowns.
International tyre operations reported operating profit of $5.94 million during the quarter despite raw material costs and start-up costs for production in Asia. Sales climbed 20.7 percent to a record $283 million.
Armes said the tyre maker also has cut its capital expenditure plans for the year.
However, Armes said Cooper is improving its cost structure by working toward efficiency and is excited about its recently announced production investments in Mexico.
From Rubber & Plastics News (A Crain publication)