Cooper reports third quarter results
Cooper Tire & Rubber Co. today reported net income attributable to Cooper Tire of $45 million for the quarter ended Sept. 30, 2010, a decrease of $2 million from the same period in 2009. Net sales were $883 million, an increase of $80 million, or 10%, from the prior year. Operating profit was $67 million for the quarter, a $4 million decrease compared with $71 million in 2009.
Results during the quarter included restructuring charges of $5 million, related primarily to the closure of the Albany, Ga., facility, a decrease of $9 million from the third quarter of 2009. The company officially concluded the restructuring project during the third quarter of 2010.
When compared with the prior year, the decrease was the result of higher raw material prices that were in part addressed by price increases and mix. Improved manufacturing, increased utilization of capacity and lower restructuring costs also contributed favorably to results.
Through the first nine months of 2010, Cooper generated $2.4 billion in net sales, compared with $2 billion during the same period in the prior year, an increase of 22%. Net income attributable to Cooper Tire & Rubber Co. was $100 million for the same period, compared with $13 million in 2009. The change in net income included $62 million of improvement from discontinued operations.
The company ended the quarter with $347 million of cash and cash equivalents, a decrease of $63 million compared with the prior year third quarter balance of $410 million.
North American Tire Operations
North American Tire Operations achieved net sales of $648 million during the third quarter, up from 2009 net sales of $574 million. The increased sales were the result of stronger price and mix partially offset by decreased volumes, the company said.
Total light vehicle tire shipments for Cooper's North America segment in the United States decreased by 1.8%, outperforming the total industry shipment decrease of 2.7% reported by the Rubber Manufacturers Association. The prior year third quarter's comparable shipments were extremely strong as the segment had higher levels of available inventory to meet the rebound in customer demand, the company says.
The segment entered the third quarter of 2010 with historically low levels of inventory.
The segment's operating profit was $55 million for the third quarter, or 8.5% of net sales. This is an increase of $7 million compared with the same period in 2009. Favorable pricing and mix of $75 million was more than offset by $96 million of higher raw material costs. Improved manufacturing operations increased results by $11 million as the segment leveraged consolidated operations. Additionally, reduced production curtailments at these facilities contributed $6 million. Other factors improved costs by $5 million. Restructuring charges decreased by $9 million. Lower volumes reduced profits by $3 million.
For the nine months ended Sept. 30, 2010, the segment had operating profit of $88 million, a $16 million improvement compared with the first nine months of 2009.
International Tire Operations
The company's International Tire Operations reported $325 million in net sales, an increase of $28 million, or 10%, compared with the prior year same quarter. The increase reflected positive price and mix partially offset by decreased volumes. Asian operations increased sales volumes by 2.5% including inter-company shipments, while European operations reported a decline of 5.1% compared with the prior year.
The segment's operating profit decreased by $9 million, from $30 million in the third quarter of 2009 to $21 million in the third quarter of 2010. Favorable price and mix of $48 million were more than offset by higher raw material costs of $59 million. Other costs including currency impacts were favorable by $4 million, while the decrease in volumes was unfavorable by $2 million.
For the nine months ended Sept. 30, 2010, the segment had operating profit of $64 million, a $17 million improvement compared with the first nine months of 2009.
Roy Armes, chief executive officer, commented, “We were pleased with the strong margins achieved by the company during the third quarter of 2010 and the continued strong demand for our products. We entered the third quarter with lower inventory in contrast with a year ago when high levels of inventory were available to support demand. We are taking action to increase our production levels and intend to produce 10% more units in 2011 than in 2010.
“We expect raw material costs will continue to be elevated in the near future and have implemented price increases around the globe. Our focus remains on profitable top line growth including opportunities in various global regions and with new products. We also remain committed to improving our cost structure while prudently managing our resources and driving improved organizational capabilities. Changing industry and economic conditions can still present challenges, but we remain optimistic about our opportunities to further improve results."
Cooper’s management team will discuss the financial and operating results for the quarter in a conference call today 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 Web site at www.coopertire.com.