Cooper Posts $25 million 3Q Net Loss

Cooper Tire & Rubber Co. reported a $25 million net loss in the third quarter of 2006 despite quarterly sales improving 28 per cent to $716 million. Through the first nine months of 2006, Cooper posted a net loss of $51 million against sales of $1.9 billion, up 22 per cent versus the same period of 2005. Sales at Cooper Europe reached $80 million, up more than 14 per cent compared to the same period last year. The increase in European sales is said to have been the result of approximately 3 per cent higher unit volume, the impact of prices increases and favourable exchange rates.

Cooper said the quarterly loss was due to a number of factors, including costs associated with North American inventory adjustments; $5 million in severance paid to former chairman, president and CEO Tom Dattilo; expenses related to closing its Athens, Georgia, plant; and the restructuring of its European operations.

Cooper’s sales increase was buoyed by the operations of Cooper Chengshan (Shandong) Passenger Tire Co. and Cooper Chengshan (Shandong) Tire Co., as well as improved sales and product mix in Europe and North America.

Cooper’s North American Tire operations reported sales of $552 million in the third quarter of 2006, up 8 per cent from the same period last year.

Analysts optimistic

Deutsche Bank analysts interpreted the signs positively. “Despite the loss in the third quarter, we believe the results pointed to initial signs of a turnaround. Raw material prices now appear to have peaked, and recent industry data is pointing to a soft recovery in the North American light vehicle replacement tyre market. These industry trends, coupled with at least $50 million of restructuring savings we expect Cooper to achieve next year, should allow it to achieve earnings per share of at least $1.00 in 2007.”