Cooper Tire & Rubber Co. reported net income of $1.7 million on net sales of $679 million for the quarter ended March 31, 2008. That compares to income of $20.7 million on sales $669 million for the same period a year ago.
The increased revenues were driven by Cooper's International Operations segment, which recorded record sales of $232 million for the first quarter.
Cooper says a number of factors adversely affected operating results:
* increased raw material costs,
* increased products liability costs, and
* decreased volumes in North America.
Recent changes in macroeconomic conditions in North America have created a new set of challenges, according to the company. They include the reduction in miles driven by consumers in reaction to the economic slowdown. In addition, raw material costs continue to climb and show no signs of declining in the near term.
"Despite these headwinds, we are well-positioned and fully committed to our long-term strategy to build a sustainable and cost competitive supply of tires, profitably grow our business, and increase our organizational capabilities," says CEO Roy Armes.
"We are fortunate to be in a position to deal with this current economic environment with a strong balance sheet, high liquidity levels and the anticipated sale of our investment in Kumho Tire Co. We have the financial strength to pursue these goals going into the second quarter, the rest of the year and beyond."
Armes says Cooper will increase its focus "on delivering cost improvements during 2008." Many of the initiatives area already in place.
"These efforts, seasonal volume increases, very good order patterns in specific profitable tire lines, and success in implementing price increases, provide support for our belief that results will be appreciably more favorable as the economy improves."
Cooper posted an operating profit of $9.5 million in 1Q 2008, compared to $29.1 million in the first quarter of 2007.
In North America, Cooper's tire operations generated sales of $498 million, down 3% from 2007's record first-quarter sales. The decrease was the result of lower unit volumes partially offset by improved mix. The largest volume decreases were in the areas of economy passenger and light truck tires, says the company.
Operating profit for the North American Tire business unit declined 68.5% year over year to $8 million predominantly as a result of decreased volumes.
Also during the quarter, the company repurchased 803,000 shares of Cooper stock for $14 million. This brings the company's total shares repurchased in the last six months to 3.8 million, or 6% of the company's outstanding shares. Debt repurchases during the quarter totaled $14 million.
Cooper announced a quarterly dividend of 10.5 cents per share on common stock, payable June 30, 2008, to stockholders of record at the close of business June 2, 2008. This will mark the 145th consecutive quarterly dividend paid by the company.
