Analysts – First Quarter Tough for Cooper

Cooper Tire & Rubber’s passenger replacement tyre volumes declined 4.3 per cent year-on-year in the first quarter of 2006, Deutsche Bank analysts have reported. While this was slightly better than the market watchers feared, raw materials rose by more than expected, ruling out any advantages. Even the $4.3 million Cooper is believed to have gained as a dividend from its shares in Kumho was not enough to offset the higher raw material costs.

“Based on spot prices for Natural Rubber (which accounts for 20 per cent of raw material costs for tyre manufacturers), we anticipate additional pressure on tyre companies’ margins in the second quarter,” the analysts commented.

The Deutsche Bank analysts noted: “Q1 is a seasonally tough quarter from a cash flow perspective.”