FINDLAY, Ohio (Aug. 7, 2014) — Cooper Tire & Rubber Co. reported increases in net income and net sales for the second quarter ended June 30, but income and sales were down for the first six months.
Net income rose 7.6 percent to $38.2 million, operating income was up 10.7 percent to $76.6 million, and sales rose 1 percent to $887.9 million. The 2013 operating profit included $7 million in costs related to the then-pending merger with Apollo Tyres Ltd., which fell apart.
“We continued our strong performance in what is usually a seasonally weak quarter, posting very good volume growth in most geographic regions,” said Roy Armes, chairman, president and CEO. “Pricing decreased, mainly driven by lower raw material costs, but the 10-percent global unit growth, along with our focus on cost reductions, helped us exceed last year’s operating margin.”
In North America, Findlay-based Cooper’s second quarter net sales rose 2.6 percent to $639.2 million and unit shipments increased 9 percent. The company said it also experienced improved efficiencies from the implementationof its new enterprise resource planning (ERP) system.
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Internationally, net sales declined 8 percent to $326.8 million despite 5-percent higher unit volume, which Cooper attributed to increases in Western Europe, particularly in the United Kingdom. These gains were partially offset by weakness in Russia and Eastern Europe. Higher unit volume in Asia included growth in both passenger car tires as well as in truck and bus radial tires.
For the six-month period, net income fell 8.7 percent to $83.6 million, or $1.30 per share. Sales dropped 3.5 percent to $1.69 billion. Operating profit for the first half was $158 million compared with $166 million last year. Operating margin was 9.3 percent vs. 9.5 percent in the 2013 period.
Looking forward, Cooper said it anticipates that third quarter raw material costs will be roughly flat sequentially, after raw material costs declined approximately 1 percent in the second quarter. The long-term raw material outlook is for costs to generally trend higher, with periods of volatility.
Capital expenditures for 2014 are expected to be between $175 million and $185 million, which is up slightly from the previous estimate as the company expects to accelerate plans to convert production capabilities to meet increased demand of higher margin tires.
“The third quarter typically is our seasonally strongest quarter, and we expect to build on our momentum as raw material costs remain favorable and demand looks solid,” Mr. Armes noted.
“We expect global tire markets will remain highly competitive, and overall economic conditions will continue to show modest improvement. Our new product lineup and demonstrated ability to execute our strategic plan positions us well to take advantage of growth opportunities worldwide. We continue to expect to meet or exceed industry unit volume growth in our largest markets this year.”
– Tire Business
