Cooper Gives Further Restructuring Details

Cooper Tire has given more details about how it will achieve its previously announced $100 million inventory reduction by the end of 2007. Analysts report that a recent update from the management pointed to improvement on all fronts. According to Deutsche Bank, the company has already achieved $40 million of its inventory reduction goal, and has identified approximately $34 million of its $70 million annual cost reduction target. Cooper is aiming for $170 million of total improvement from cost reductions and other initiatives.

Cooper also acknowledged the recent softening in natural rubber prices should improve margins relatively quickly – ie by the end of 2006 or beginning 2007.

Analysts were positive about the information, but said they expected further production cuts due to weak North American demand and Cooper’s goal of reducing inventories by $100 million by 2007. “Execution also remains a concern given the company’s disappointing track-record,” the Deutsche Bank report concluded.