Cooper Tire & Rubber Co. reported net income of $22 million on net sales of $984 million for the first quarter ended March 31, 2012. That compares to income of $16 million on sales of $902 million for the same period last year.
Operating profit for the quarter was up 50%, from $32 million to $48 million. The company's income-to-sales ratio was 2.2%.
"During the first quarter, we continued progress toward our goals in the midst of a challenging business environment," says CEO Roy Armes. "We have now achieved 11 consecutive quarters of profitability, which is a tribute to the resiliency of our business model.
"While demand has been sluggish for the industry, our new products continue to do well, as we exceeded industry growth in many product lines. We continue to believe that pent-up demand for broad-line tires exists, although it is difficult to predict exactly when that demand will manifest.
"Raw material costs remain at elevated levels," he says. "We expect costs, as measured by our raw material index, to increase between 5% and 7% sequentially in the second quarter."
Improved price and mix of $71 million offset $8 million of higher raw material costs during the quarter. Sales volumes were slightly lower than 1Q 2011.
North America Tire Operations
North America Tire Operations achieved net sales of $698 million during the first quarter, up 8% from 2011 sales of $644 million. The increased sales were the result of stronger price and mix, partially offset by a 3% decrease in lower unit sales, according to the company.
Cooper's total light vehicle shipments in the United States decreased 6.1% during the quarter, compared with a total industry decline of 5.8% as reported by the Rubber Manufacturers Association.
The segment's operating profit was $23 million, or 3.3% of net sales. This was an increase of $1 million compared with the same period in 2011. Favorable price and mix of $58 million was partially offset by $18 million of higher raw material costs.
The company's International Tire Operations reported record first-quarter sales of $404 million, an increase of $41 million, or 11%, over the first quarter of 2011. The segment's operating profit increased $13 million to $33 million.
2012 outlook
Higher manufacturing costs, including $29 million related to the labor situation at the company's manufacturing operations in Findlay, Ohio, decreased results by $31 million.
"Impacts of the labor situation in the Findlay plant are largely behind us, and our manufacturing operations will focus on efficiency improvements," says Armes.
"We continue to expect capital expenditures for 2012 to total $180 million to $210 million. This includes investments in an ERP (enterprise resource planning) system and investments to ramp up production at our Serbian operation.
"There are continued opportunities for the company to increase shareholder value as we move forward," he says. "These opportunities include building on the momentum from our new product introductions and driving cost savings to the bottom line as we become more efficient in our operations. We will also create new opportunities to enhance the effectiveness of our operations as we implement our ERP system.
"We have confidence that successful execution of initiatives aligned to our plan will move our business forward, despite the volatile environment in which we operate. We remain optimistic about our future."
Cooper’s management team will discuss the financial and operating results for the quarter in a conference call today (May 2) at 11 a.m. Eastern Time. Interested parties may access the audio portion of that conference call on the investor relations page of the company’s website at www.coopertire.com.
