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March 04, 2014

Cooper gets ready to report a black 4Q

Cooper Tire & Rubber Co. released its third-quarter 2013 results on February 28. Despite a $168,000 loss attributable to the company, Cooper will report positive net income for the fourth quarter, according to Chairman, CEO and President Roy Armes.

Issues surrounding the failed "merger" with Apollo Tyres Ltd. had a significant negative impact on 3Q results, "and we anticipate some carryover of these negative impacts to a lesser degree in the near term,” he said. “Still, our business model remains resilient and we will report positive operating profit and net income for the fourth quarter and second half of 2013."

Through the first three quarters of fiscal 2013, Cooper posted net income of $91.4 million on net sales of nearly $2.6 billion. That compared to income of $147.4 million on sales of more than $3.1 billion for the same period last year.

Based on Armes' comments, Cooper will record net income of more than $91.5 million for fiscal 2013. As for net sales, they were down 24% in the third quarter compared to the same period last year. He said negative impact from the failed merger would carryover in the fourth quarter "to a lesser degree."

In the fourth quarter of 2012, Cooper recorded net sales of close to $1.1 billion. Modern Tire Dealer estimates the company will finish the year with nearly $3.5 billion in sales. That will make the company's income-to-sales ratio no worse than 2.6%.

Industry analyst Nick Mitchell, senior vice president of research for Northcoast Reseach Partners LLC, says Cooper's 3Q revenue, operating income and earnings per share fell well short of his firm's outlook and consensus estimates. (For more information on Cooper's 3Q 2013 financial results, click "Cooper reports 3Q loss.")

"While the strong sell-out trends in the replacement tire market in the U.S. during 4Q '13 likely provided an uptick in order trends for all manufacturers, including Cooper, we are maintaining our "Neutral" rating on the company's shares," he says. "We think the deterioration in the company's fundamentals over the past 12 months, including the price investments and steep market share losses in North America, will take longer to reverse than the market expects."

Cooper is expected to report its 4Q results later this month.

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