Cooper achieved record sales in second quarter
Cooper Tire & Rubber Co. posted net sales of $773 million for the second quarter, a record for the company. However, Cooper also suffered a net loss of $22 million during the quarter.
Increased sales "were driven by pricing and improved mix, partially offset by decreased tire unit volumes in North America," say Cooper officials.
"As with many manufacturing companies, Cooper faced intense challenges during the quarter that adversely affected operating results. These included record high raw material costs, increased utility costs, and weak market demand in North America.
"Raw material shortages also led to Cooper’s decision to temporarily curtail production during the quarter in North America."
Cooper's quarterly earnings were negatively impacted by an accounting limitation on the amount of losses it could tax benefit on an interim reporting basis. (This negatively impacted the earnings per share by 21 cents per share on a diluted basis.)
Through the first six months of 2008, Cooper posted record $1.5 billion in net sales. The recorded net losses were $21 million during the same period, compared to net income of $38 million in 2007.
Cooper's North American Tire unit generated sales of $548 million, up 3 percent from 2007’s record second quarter. Operating losses were $22 million, an amount significantly below the same period in 2007.
"The sales record was the result of increased pricing and improved mix, offset by 13 percent lower volumes," explain company officials. "These lower volumes were primarily in the broadline area.
"The Cooper brand continued to improve position in North America and increased its share of market penetration as compared to the Rubber Manufacturers Association reported shipments. Market penetration of light truck products also increased during the quarter."
Operating profit for North American Tire declined year over year as a result of several key operating factors. Raw material increases during the quarter negatively affected results by $51 million.
"This was partially offset by price increases of $32 million. Improved customer and product mix were offset by decreased volumes during the quarter."
In addition, the curtailment of production triggered $13 million of costs during the quarter, primarily related to unabsorbed overhead. Products liability expense for the quarter was $3 million higher. Other negative cost factors in North America related to increased utility costs and the cost of maintenance projects executed during the shutdowns.
"The North American segment was successful in rebuilding inventories during the quarter in anticipation of both the peak selling season that occurs during the second half of the year and the strategic increase of inventories necessary to continue its industry leading fill rates."