Total Profits Slightly Down, but Relatively Good NA Quarter for Cooper
Cooper Tire & Rubber Company has reported a 3.6 per cent reduction in operating profit, making $67.1 million, though there was a 10 per cent rise in total company sales for the third quarter (ending 30 September) of 2010 in year-on-year comparisons. Net income attributable to Cooper Tire reached $45 million, a decrease of $2 million from the same period in 2009. Net sales were $883 million, an increase of $80 million from the prior year. The Company reported net income of 71 cents per share on a diluted basis.
Results during the quarter included restructuring charges of $5 million, related primarily to the closure of the Albany, Georgia facility, a decrease of $9 million from the third quarter of 2009, said Cooper. The Company officially concluded the restructuring project during this third quarter.
Cooper says that, when compared with the prior year, “the decrease was the result of higher raw material prices that were in part addressed by price increases and mix. Improved manufacturing, increased utilization of capacity and lower restructuring costs also contributed favourably to results.”
Cooper has increased its YoY sales in financial year 2010 to date, generating $2.4 billion in net sales compared with $2 billion during the same period in 2009; an increase of 22 per cent. Net income was $100 million for the same period, compared with $13 million in 2009. The change in net income included $62 million of improvement from discontinued operations. Cooper ended the quarter with $347 million of cash and cash equivalents, a decrease of $63 million compared with the prior year third quarter balance of $410 million.
North American Tire Improving
North American Tire Operations achieved net sales of $648 million during the third quarter, up from 2009 net sales of $574 million. The increased sales were the result of stronger price and mix partially offset by decreased volumes, says Cooper. Total light vehicle tyre shipments for Cooper’s North America segment in the United States decreased by 1.8 per cent, outperforming the total industry shipment decrease of 2.7 percent reported by the Rubber Manufacturers Association. Cooper also noted that 2009 third quarter’s comparable shipments were “extremely strong as the segment had higher levels of available inventory to meet the rebound in customer demand”. The segment entered the third quarter of 2010 with historically low levels of inventory, Cooper says.
The segment’s operating profit was $55 million for the third quarter, or 8.5 percent of net sales. This is an increase of $7 million compared with the same period in 2009. Favourable pricing and mix of $75 million was more than offset by $96 million of higher raw material costs. Improved manufacturing operations increased results by $11 million as the segment leveraged consolidated operations. Additionally, reduced production curtailments at these facilities contributed $6 million. Other factors improved costs by $5 million. Restructuring charges decreased by $9 million. Lower volumes reduced profits by $3 million.
For the nine months ended 30 September, 2010, the segment had operating profit of $88 million, a $16 million improvement compared with the first nine months of 2009.
International Tire Operating Profit Down 9.4%
While Cooper’s International Tire Operations reported $325 million in net sales – an increase of $28 million, or 10 per cent, compared with the prior year same quarter – the segment’s operating profit decreased by $9 million, from $30 million in the third quarter of 2009 to $21 million in the third quarter of 2010.
Favourable price and mix of $48 million were more than offset by higher raw material costs of $59 million. Other costs including currency impacts were favourable by $4 million, while the decrease in volumes was unfavourable by $2 million. The increase in sales was a reflection of positive price and mix partially offset by decreased volumes. Asian operations increased sales volumes by 2.5 per cent including intercompany shipments, while European operations reported a decline of 5.1 per cent.
For the nine months ended 30 September, 2010, the segment had operating profit of $64 million, a $17 million improvement compared with the first nine months of 2009.
Roy Armes, chief executive officer, commented: “We were pleased with the strong margins achieved by the company during the third quarter of 2010 and the continued strong demand for our products. We entered the third quarter with lower inventory in contrast with a year ago when high levels of inventory were available to support demand. We are taking action to increase our production levels and intend to produce 10 per cent more units in 2011 than in 2010.
“We expect raw material costs will continue to be elevated in the near future and have implemented price increases around the globe. Our focus remains on profitable top line growth including opportunities in various global regions and with new products. We also remain committed to improving our cost structure while prudently managing our resources and driving improved organizational capabilities. Changing industry and economic conditions can still present challenges, but we remain optimistic about our opportunities to further improve results.”
Related News:
Comments