Cooper reports third quarter profits
Cooper Tire & Rubber Co. today reported operating profit of $71 million for the quarter ended Sept. 30, 2009, a $118 million improvement from the same period in 2008.
Net sales for the period were $803 million, an increase of $9 million from the prior year. Net income was $47 million for the quarter, a $102 million improvement from a loss of $55 million in 2008.
Improved results were driven by lower raw material costs and supported by the company’s continued manufacturing improvements and improved utilization of capacity, reported Cooper. These positive impacts were offset by unfavorable price and mix and restructuring charges. Quarterly sales volumes showed improvement and had a minor positive impact on a year-over-year basis.
The company noted it had ceased production at its facility in Albany, Ga., during the quarter and incurred related restructuring costs of $13 million. Operating profit was 8.8% of net sales during the quarter, compared with an operating loss of 5.9% during the third quarter of 2008.
Inventory reductions and improved operating results helped reduce the company's debt by $77 million during the first nine months of 2009.
Through the first nine months of 2009, Cooper generated $2 billion in net sales. Operating profit was $96 million during the same period, compared with operating losses of $53 million in 2008.
North American Tire operations sales were $574 million during the third quarter, down slightly from 2008 net sales of $586 million during the same quarter in 2008. This decrease was the result of increased volumes offset by slightly worse price and mix impacts, the company reported.
Total shipments for the segment in the United States were an increase of 2%, "similar to the total industry shipment increase of 3% reported by the Rubber Manufacturers Association," noted the company. "The Cooper brand continued to outpace the industry in the U.S. market, while private label shipments began to improve relative to recent quarters, but still lagged industry comparisons."
Operating profit for the third quarter improved significantly to $48 million, compared with operating losses of $51 million from the same period in 2008. Raw material cost improvements during the quarter positively affected results by $135 million compared with the prior year quarter.
Manufacturing operations improved by $13 million as a result of the company’s continued focus on improvement in this area, Cooper reported.
Improvements in market demand resulted in curtailment costs that were lower by $4 million.
Offsetting this were net negative price and mix changes of $25 million. Products liability combined with selling, general and administrative costs increased $9 million. Other charges including incentive related costs were increased $5 million. Restructuring charges were $14 million larger than the prior year.
To date, Cooper has incurred $113 million of restructuring costs related to the closure of its Albany, Ga., facility. The total restructuring costs are estimated to be $120 to $145 million, of which 60% to 70% are expected to be non-cash. Production ceased at the facility in September and the company is continuing with the process of relocating equipment to its other facilities.
For the nine months ended Sept. 30, 2009, the segment had operating profit of $72 million, a $137 million improvement over the first nine months of 2008.