Cooper Tire & Rubber Co. posted net income of $71.3 million on net sales of $740.3 million for the second quarter of 2016. That compares to income of $60.4 million on sales of $751.8 million for the same period the previous year.
The company's net income-to-sales ratio was 9.6%, up from 8% in 1Q 2016.
Operating income increased 10.5% for the quarter, from $99.4 million to $109.9 million. In addition, unit volume increased 0.9% year-over-year.
“We achieved record-setting second-quarter operating margin, building upon the strong results we delivered in the first quarter," says Chairman, CEO and President Roy Armes. "The Americas segment posted another terrific quarter, generating operating margin of more than 17%. Our International segment performed better than expected, moving from a loss to delivering an operating profit for the period.
"Cooper continues to execute on our strategy to deliver shareholder value, including returning cash to shareholders through our quarterly dividend and share repurchases, which totaled more than $29 million during the second quarter."
Americas Tire Operations
Cooper's Americas Tire Operations recorded net sales of $655 million for 2Q 2016, down 2.7% from 2Q 2015. Both the operating profit and operating margin was comparatively up as well.
2Q '16 2Q '15 % change
Net sales $655 million $673 million -2.7%
Operating profit $116 million $109 million +6.9%
Operating margin 17.7% 16.1% +9.9%
“As my retirement will be effective Aug. 31, this is the final quarter I will report on behalf of Cooper," says Armes. "It has been my honor to lead such a talented and committed team in transforming the Cooper business model to deliver outstanding results quarter after quarter, positioning the company for long-term success.”
Outlook for Cooper Tire
Throughout the remainder of the year, Cooper anticipates the following:
* Third-quarter raw material costs will be up modestly from the second quarter.
* Unit volume growth will be up in each of the company’s segments in the second half.
* Total company operating margin, excluding the impact of acquisitions and non-cash pension
settlement charges, will be modestly above 2015 levels. This projection includes an
estimate for the impact of the pending truck and bus radial tire tariffs, which was not included in
Cooper’s previous margin outlook.
* The International segment, excluding the impact of acquisitions, will perform better than
originally anticipated for the full year 2016. Management now expects the segment to deliver a small
profit for the full year 2016.
* Capital expenditures, excluding the impact of acquisitions, will range from $210 million to
$240 million for the year.
* There will be a non-cash pension settlement charge of $14 million to $18 million in the third
quarter of 2016 related to optional lump-sum payments of benefits offered to certain former
employees. This option was offered to reduce the size and potential future volatility of Cooper’s
domestic defined benefit pension plan obligations.
The company continues to make progress on its planned acquisition of a majority interest in Cooper Qingdao Tire Co. Ltd., a joint venture in China to produce truck and bus radial tires for global markets. The transaction is expected to close by the end of this year pending certain permits and approvals by the Chinese government.
“I leave Cooper highly optimistic about the future with a great strategic plan in place that
Brad Hughes, who takes the helm as president and CEO on Sept. 1, was instrumental in developing," says Armes. "I have no doubt that Brad will lead with great energy, expertise, and a commitment to the long-term success of all Cooper stakeholders.”
For information on Cooper Tire's first-quarter financial results, check out this link: