Cooper Standard in ‘aggressive cost recovery mode' as losses widen
12 May 2022
US automotive supplier to provide full year guidance in second quarter
Northville, Michigan – Cooper Standard Holdings has seen its first quarter loss widen in 2022 amid increasing commodity and materials cost and a continued slowdown in the car industry.
Sale for the quarter ending 31 March fell 8.3% to $613 million (€585 million) during the quarter, reflecting continued weak light vehicle production volume, Cooper Standard announced 5 May.
The automotive components manufacturer reported a net loss of $61 million during the three-month period, down from a loss of $34 million the year before.
Adjusted net loss, which excludes restructuring, other special items, was $51 million, considerably lower than a loss of $14.5 million reported in 2021.
The US supplier linked the loss primarily to higher commodity and material costs, unfavourable volume and mix resulting from reduced customer production schedules, and cost increases from general inflation.
“We continued to make progress in our commercial negotiations to recover incremental material costs and we expanded index-based agreements,” said Jeffrey Edwards, chairman and CEO.
The resulting price increases, he said, helped to partially offset the impact of higher input costs and lower production volumes in the first quarter.
The company said it was continuing “aggressive efforts” to recover incremental costs associated with increasing raw material prices, higher wages and other general inflation.
These, it said, will be achieved through a combination of expanded index-based agreements, price increases and deferred price concessions.
The expanded index-based agreements, currently in place with customers representing over 60% of revenue base, cover both oil-based materials and metals.
The agreements, Cooper Standard said, will reduce the impacts of commodity price volatility on the company's future financial results.
The US supplier did not provide a financial outlook for 2022, stating that light vehicle manufacturers and their suppliers continue to experience significant production delays and disruptions.
“Significantly higher commodity and materials costs, rising wages, general inflation and tight labour availability continue to create additional headwinds for the industry,” the US company added.
While customer demand for light vehicles is on the rise in the US, Cooper Standard said the projected ramp up remains dependent on the capacity and efficiency of the global supply chain.
As a result, the company expects to provide a formal update to guidance following the second quarter of the year.