Standard & Poor's puts Cooper on CreditWatch
Standard & Poor's Rating Service has placed Cooper Tire & Rubber Co.'s credit on CreditWatch "with negative implications," say Standard & Poor's officials. "The action resulted from the tire manufacturer's weak operating earnings and cash flow generation, and the likelihood that future financial results will fall short of previous expectations."
Cooper posted a net loss of nearly $7 million (including discontinued operations) on net sales of $572 million for the fourth quarter ended Dec. 31, 2005.
That compares to net income of $133 million on sales of $541 million for the same period in 2004.
"We expect Cooper to see some benefits from improved manufacturing efficiencies and increased sales of its high-margin products," says Martin King, a Standard & Poor's analyst.
"But it is unclear whether the improvements will be sufficient to strengthen operating results so that the company's credit protection measures are consistent with the current rating. We will improve Cooper's prospects for improving operating results."
Cooper currently has a BB+ rating with the agency. "The ratings may be lowered if it appears that sufficient improvement will not occur or will be substantially delayed," says King.