Findlay, Ohio — Cooper Tire & Rubber Co. suffered an 83.2% drop in operating income in the quarter that ended 30 June on 29.6% lower sales, results attributed to the implosion of economic activity due to the global pandemic.
Cooper's second quarter operating income fell to $5.3 million (€4.48 million) on sales of $496.3 million, for an operating margin of 1.1% (versus 4.7% a year ago). Global unit volume during the quarter decreased 27.5% from 2019. On a net basis, Cooper posted a net loss of $6.22 million.
Cooper attributed the drop in operating profit to the effects of lower unit volume ($44 million) and higher manufacturing costs ($39 million).
The deficits that were offset partially by $30 million of favourable raw-materials costs, $15 million of favourable price and mix and $7 million lower selling, general and administrative (SG&A) expenses.
For the half year, Cooper reported an operating loss of $917,000 on 20.8% lower sales of $1.03 billion. The net loss was $17.8 million, versus net income of $15.8 million a year ago.
Despite the double-digit dips in sales and earnings and the continuing risks imposed by the Covid-19 pandemic, Cooper is confident its business will improve in the second half and that it can recover longer term.
"As we look further out, given our attractive value proposition, growing awareness of the Cooper brand and the momentum of our strategic initiatives, we are confident in our ability to return to our mid-term target range in the future," Cooper Tire President and CEO Brad Hughes said.
In his comments on the results, Hughes noted that Cooper started the year with a strong balance sheet and took "early and decisive actions" to help weather the coronavirus storm and said Cooper "seized opportunities" to continue to build business.
With the economic recovery that started to emerge later in the quarter, Cooper said it was able to generate significant free cash flow for the period and grow market share in the US.
"We are excited that our strategic initiatives are improving our business even in challenging circumstances, and we are optimistic about the future," Hughes said.
In the Americas, operating income fell 53.4% in the quarter to $21.8 million as sales dropped 26.9% to $425.5 million of the effects of 31.5% lower sales volume.
At the same time, though, Cooper is claiming it gained market share in the passenger and light truck tire category, where its shipments fell 24.1% versus the 31.7% drop registered by the industry as a whole.