In a conference call to discuss the company’s second quarter financial results, Roy Armes, Cooper Tire & Rubber Co. chief executive officer, said the company has started shipping consumer tires to Sears, Roebuck and Co.
“We’re starting at ground zero” with Sears, Armes commented.
This new business contract with Sears is one reason for the company’s return to profitability, an “exciting achievement,” says Armes.
(The tires are both Cooper and Sears-branded product, according to the company. "It's an exciting opportunity for us," says Curtis Schneekloth, director of investor relations for Cooper's North American Tire division. "It shows how we're improving as a company.")
The company declared a $28 million second quarter operating profit compared with the $22 million operating loss from the same period in 2008 (see related www.moderntiredealer.com items).
Armes also reported:
* Global economy continues to present headwinds going forward.
* The company is working on securing new customers in unrepresented channels
* The Cooper brand outperformed the market.
* No tire price erosions are expected, although prices are coming down because of lower raw material costs. An “uptick” in raw material prices is expected in the third quarter.
* The company continues to tweak its pricing and product screens.
* In China, the Cooper brand outpaced market growth.
The company is keeping a close eye on the he United States International Trade Commission (ITC) proposal to President Barack Obama that the U.S. impose duties of 55% in the first year, 45% in the second year and 35% in the third year on certain passenger and light truck tires from China. The president will make his decision in September.
Armes feels the importers may be ramping up their production ahead of the president’s decision. However, he feels it’s too difficult to predict how the importers are responding. If duties are imposed on imported tires, price increases on Cooper tires would be “one alternative to manage supply and demand,” Armes said.
