Findlay, OH – Cooper Tire & Rubber reported third quarter net sales were a record for any quarter of $1.1 billion, an increase of $47 million, or 4%, compared with the same period a year ago. Operating profit was a record for any quarter of $130 million, $82 million higher than third quarter 2011 and 11.8% of net sales. Net income attributable to Cooper Tire & Rubber was a third quarter record of $74 million, or $1.17 per share on a diluted basis, and compares with $17 million, or $0.27 per share, for the same period last year.
“We are confident that our ability to execute our strategic plan will drive results and build on the positive momentum we’ve established over the last several quarters. Our third quarter financial results include several record performances for Cooper Tire,” said chief executive officer Roy Armes. “Total global volume grew by 5%. Once again, our U.S. volumes grew while the overall industry declined. We believe our ability to outpace the industry is attributable to strong execution of our strategic plan, especially our focus on new product introductions that are positioning Cooper as the consumer choice for performance and value. In addition, our initiatives to improve efficiency helped lower costs, and we benefitted along with the industry from lower raw material costs. We are pleased with our teams and their ability to drive results around the world, which should continue to deliver value to our shareholders.”
Third quarter profits were positively impacted by lower raw material costs of $144 million, volume increases totaling $9 million and $7 million in manufacturing efficiencies. These profit contributors were partially offset by $36 million in unfavorable price and mix, $28 million in higher selling, general and administrative costs as the company continued to invest in expanding distribution networks and promoting Cooper brands, $7 million in higher product liability costs and $7 million in “other” costs, which included higher pension expense. Higher incentive compensation costs, resulting from higher profits, affected selling, general and administrative costs and other costs.
North America Tire Operations achieved net sales of $816 million during the third quarter, up 7% from third quarter 2011 net sales of $760 million. Increased sales resulted from higher unit volumes and higher price and mix. Unit sales for the North American segment increased 4% compared with the prior-year third quarter. Cooper’s total light vehicle tire shipments in the United States increased 6% during the quarter compared with total industry shipments that were down 3% as reported by the Rubber Manufacturers Association (RMA). The segment’s operating profit was $105 million for the third quarter, or 12.8% of net sales. This represents an increase of $87 million compared with third quarter 2011. The improved profit includes a $102 million decrease in raw material costs, manufacturing efficiencies of $9 million and higher unit volumes of $6 million. These improvements were partially offset by $14 million of higher selling, general and administrative costs. Product liability costs increased $7 million and “other” costs were $7 million higher attributable to pension related expense and incentive compensation. Price and mix was $1 million unfavorable. Higher incentive compensation costs, resulting from higher profits, affected selling, general and administrative costs and other costs.
The company’s International Tire Operations reported third quarter sales of $411 million, a decrease of $11 million, or 3%, compared with the same period a year ago. Higher unit volumes of $45 million and favorable currency translation of $4 million were more than offset by pricing and mix of $60 million. Sales volumes in Asia increased 10%, while European sales volumes decreased 5%. Higher sales in Asia were driven by improved truck and bus radial and premium passenger car tire sales. European sales volumes decreased as a result of weak market conditions that were partially offset by incremental volumes from the company’s new operation in Serbia. The International segment achieved third quarter operating profit of $36 million, or 8.6% of net sales, compared with $30 million, or 7.2% of net sales, for the same period a year ago. Profits improved by $64 million attributable to lower raw material costs and $3 million from higher unit volumes. Partially offsetting these improvements were unfavorable price and mix of $53 million and $7 million of higher selling, general and administrative costs, reflecting strategic investments to expand the company’s distribution network in China and to promote Cooper brands. Manufacturing efficiencies decreased $2 million.
Source: Rubber World online
