Cooper's 2003 plans focus on cutting costs, improving product mix
"We will continue to focus on reducing costs and carefully managing our assets," Cooper Tire & Rubber Co. Chairman, CEO and President Tom Dattilo said during a press conference late this morning.
Cooper saved $11 million during the fourth quarter of 2002 through restructuring, according to Dattilo.
"We're working hard in several different areas," says Dattilo.
The Findlay, Ohio-based tiremaker reduced its inventory by 1.2 million units during 2002; in 2003, its plants will run closer to full capacity, which "will have a positive impact on inventory."
Demand for replacement tires "began to show life" during Q4 2002, says Dattilo.
Cooper's light vehicle tire shipments grew 10% during that time and medium truck tire demand increased as well.
Less-expensive, entry-level tires comprised most of Cooper's Q4 sales, according to Dattilo.
The company's introduction of high and ultra-high performance products this spring "will improve our product mix."
Dattilo also says it will sell more Cooper brand tires through large tire dealers this year.
Cooper's net income for the fourth quarter of 2002 totaled $23 million on revenue of $842 million vs. $16 million on sales of $777 million earned during the same period the previous year.
Its North American Tire division achieved 8.5% operating margins during the quarter. "Our long-term goal is still 10% operating margins -- a tough call, but we think we can do it."
Dattilo still expects 2003 to be a challenging year.
"Raw material costs will continue to increase during the first half, though not as dramatically as over the past six months."
To move forward, demand for tires will have to increase "at some point," he says. "The level they're at today isn't sustainable in the long-run."
Fortunately, tires that were sold "before their time" during the Firestone recall will start wearing out and will need to be replaced, Dattilo predicts.
And he expects price increases that were enacted last year will stick. "Long-term, the pricing in this industry will go up."
However, Cooper's operating income during the first half of 2003 "will be down compared to the first half of 2002.
"But operating income during the second half of 2003 will be better than the second half of 2002."