Cooper rebuilding inventories to improve fill-rates

ERJ staff report (TB)

Findlay, Ohio -- Cooper Tire & Rubber Co. expects to increase production 10 percent this year over 2010 in order to rebuild inventories and restore the company's fill rates for its dealers to more accepted levels, CEO Roy Armes told financial analysts today.

Cooper officials did not disclose specifics about the firm's inventories or fill rates during the conference call but stressed the company is making strides in expanding production to rebuild inventories left lean after the nation's financial slowdown in late 2009 and early 2010.

Cooper also indicated it's building inventories ahead of the third quarter, traditionally the industry's busiest when demand can outstrip prodcution capacity, and is investing in its production capacities to support the launch of several new products this year.

Regarding prices, Mr. Armes said Cooper expects “raw material costs to remain at elevated levels after the first quarter, but persistent volatility can make it difficult to accurately predict movements in raw material prices.”

Cooper raised prices twice during the first quarter-2.5 percent on Feb. 1 and 8 to 9 percent on March 15-but the company executives declined to say whether more increases are being planned.

“We have forecasted that our raw material index is likely to be sequentially higher, by between 10 percent and 15 percent, during the second quarter,” Mr. Armes said. “We believe increases to the raw material index should begin to decelerate during the third quarter.”

During the quarter Cooper invested $134 million to buy 100-percent control of Cooper Kenda Tire Manufacturing (Kunshan) Co. Ltd. in China and increase its ownership of Corporacion de Occidente S.A. de C.V. in Mexico to a majority stake.

Mr. Armes called these investments “great examples of our dedication to increasing our presence in these fast-growing markets….

“Our focus is on efforts that will continue to better position the company to improve shareholder returns,” he added, “and we remain optimistic about our opportunities to further improve results by successfully implementing tactics that will profitably grow the top line, improve our global cost structure and improve organisational capabilities.”

From Tire Business (A Crain publication)

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