Cooper boosts sales but also takes loss during 3Q
Cooper Tire & Rubber Co. posted net sales of $716 million for the third quarter of 2006, an increase of more than 28% over the same period last year. While Cooper's revenue increased, it took an operating loss of $7 million during the quarter versus operating income of $14 million for 3Q 2005.
Factors contributing to the loss included:
* $10 million in unabsorbed overhead due to reduced production levels associated with Cooper's efforts to slash inventory in North America;
* $5 million in severance costs relating to former Chairman, CEO and President Tom Dattilo, who left the company in August;
* $2 million in restructuring expenses associated with the shuttering of the Findlay, Ohio-based tiremaker's factory in Athens, Ga.;
* the reorganization of Cooper Tire Europe's management structure;
* escalating raw material costs.
Cooper notes that its loss during 3Q 2006 was a "sequential improvement" over the $26 million loss it suffered during the second quarter of 2006.
The firm's North American Tire operations achieved sales of $552 million during the third quarter, up 8% versus the same period last year.
"This increase is attributable to improved pricing and mix, as well as a small improvement in tire unit sales," say Cooper officials.
However, operating results for Cooper's North American Tire unit declined due to several reasons, including $10 million in overhead from temporary plant shutdowns earlier this year and other factors.
"In total, North American Tire operations incurred an operating loss of $3 million in the third quarter, down compared to the operating profit of $16 million generated in the third quarter of 2005, but up sequentially from the operating loss of $30 million incurred in the second quarter of 2006."
During 3Q 2006, Cooper recorded an income tax expense of $7 million, including a tax benefit of $8 million on a pre-tax loss from continuing operations of $17 million. The tax expense also includes $4 million in net favorable adjustments resulting from changes in Cooper's estimates of tax credits and deductible items and a $19 million valuation allowance to reduce deferred tax assets to amounts more likely to be realized.
For the first nine months of 2006, Cooper's sales totaled $1.9 billion, a 22% increase over the first nine months of 2005. However, Cooper took an operating loss of $38 million and a net loss of $51 million during the first nine months.