Cooper Reports Lower Income and Sales in 3Q
Cooper Tire & Rubber Co.'s third-quarter 2019 results were comparatively down in net income, net sales, operating income and tire volume. The company's Americas Tire Operations and International Tire Operations both contributed to the year-over-year decreases.
Cooper posted net income of $29.3 million on net sales of $704.1 million for its third quarter ended Sept. 30, 2019. That compares to income of $53.7 million on sales of $737.6 million for the same period in fiscal 2018.
The company's net income-to-sales ratio was 4.1%.
Operating income was down 35%, from $81.2 million to $52.7 million, and was 7.5% of net sales compared to 4.7% in the second quarter and 4.3% in the first quarter. In the third quarter of 2018, Cooper's operating income was 11% of net sales.
Global unit volume was down $54 million, a decrease of 7%, compared to the third quarter of 2018.
"Despite the continued impact of tariffs, we were pleased to deliver sequential operating profit margin improvement in the third quarter driven by positive trends in pricing, mix and raw materials,” said CEO and President Brad Hughes. "As expected, our volume was impacted by customer inventory actions in the U.S., as well as challenging market conditions in our other regions.
"Cooper continues to make progress on the strategic initiatives outlined at our Investor Day in 2018, including expansion into new channels and efforts to optimize our global manufacturing footprint, including our actions in the U.K. and new joint venture in Vietnam. We expect that the impact from our strategic initiatives will begin to make a more visible contribution to our results in 2020.”
The company's Americas Tire Operations results are as follows:
|Americas Tire Operations||Q3 2019 in millions||Q3 2018 in millions||% change|
|Operating margin||11.3%||13.9%||-2.6 points|
Cooper’s third-quarter total light vehicle tire shipments in the U.S. decreased 7.7%. The U.S. Tire Manufacturers Association (USTMA) reported that its member shipments of light vehicle tires in the U.S. were up 0.7%. Total industry shipments (including an estimate for non-USTMA members) increased 3.5% for the period. Cooper says its U.S. volume was impacted by customer inventory actions.
Through three quarters, Cooper recorded net income of $45.4 million on net sales of $2.03 billion. That compares to income of $77 million on sales of $2 billion through the first three quarters of 2018. Operating profit was down 21%.
"Cooper expects fourth-quarter operating profit margin to improve sequentially, with full year operating profit margin slightly above the 5.9% we reported for full-year 2018, driven by positive trends in pricing, mix and raw materials," says Hughes. "We expect continued global volume headwinds in the fourth quarter, but we anticipate growth in 2020 driven by our strategic initiatives and improving market conditions."