Cooper suffers double-digit earnings decline

Findlay, Ohio – Cooper Tire & Rubber Co. suffered double-digit drops in operating and net income for the quarter ended 31 March 31, reflecting lower unit volume and costs associated with reduced manufacturing, the company said.

Operating income dropped 54.4% to $26.5 million on 6.5-percent lower sales of $601.5 million, cutting the operating margin nearly five%age points to 4.4%. Net income fell 72.9% to $8.29 million.

President and CEO Brad Hughes said Cooper expects its performance in the months ahead to be "choppy" as the tire business "navigates through current weak U.S. demand and raw material prices inch up.

"However," he added, "we believe that underlying macroeconomic factors support improvement in tire industry demand within the second half of this year."

Cooper, he said, expects that "together with our initiatives to increase unit volumes and reduce costs, will drive improvements in our operating profit in the second half of the year."

A bright spot for Cooper was its radial truck and bus tire business, volume of which was up 25% over the 2017 first quarter and "well above" the industry trend. Cooper said its relaunch of a Cooper-branded truck tire line been very well received.

Hughes also said Cooper was encouraged by the profitability of its international segment, which accounted for nearly 27% of Cooper's corporate sales, up from 22% a year ago, reflecting 14-percent revenue growth despite a dip in unit volume.

Operating income for the Americas segment fell nearly 56% to $31.2 million, on 8.7-percent lower sales of $485.4 million, Cooper said. The company attributed the revenue drop to lower unit volume ($30 million), unfavorable price and mix ($19 million), offset slightly by a favorable foreign currency impact ($3 million).

Segment unit volume decreased 5.6% from 2017, with unit volume decreases in both North America and Latin America.

Cooper's first quarter light vehicle tire shipments in the US decreased 6.4%, compared with an industrywide drop of 1.9%, according to US Tire Manufacturers Association shipment figures for light vehicle tires in the US.

The US market performance reflected weaker than expected sellout volume and corresponding pricing and promotional activity, Cooper said.