Expiration of tariffs will not have big impact, Armes says

May 2, 2012

During a press conference following the release of its first quarter financial report,  Cooper Tire & Rubber Co.'s CEO Roy Armes agreed that  "head winds in the U.S., tail winds internationally" sums up the influences on the company's results.

Despite higher raw material costs in North America, Armes reports the company has had 11 consecutive quarters of profitability (see Cooper raises income-to-sales ratio in 1Q by clicking here). Positive results internationally, especially in Asia, helped bolster the company's bottom line.

Armes says he is perplexed by the decline in the U.S. tire market, which has been down five of the last eight years. He feels the market this year will be level at best due to customers keeping their tires longer and replacing one, two or three tires as needed instead of all four at a time. There is still a lot of pent-up demand, he adds, "Customers are still waiting for a stronger recovery."

Cooper has had growth in its premium tires sales, especially passenger and light truck tires, with broad line and value tires taking the biggest hit. The company has had successful new product introductions, which lead to customer confidence because consumers were buying buying the tires, Armes notes.

Armes feels the company's business model has been resilient in a volatile market and it will come out in a stronger position as the economy improves.

Industry analyst and Modern Tire Dealer columnist Saul Ludwig asked Armes about the tariffs possibly coming off Chinese tire imports in September.

Armes believes the tariffs will expire. When that happens, he feels that customers are not going to quickly jump to change distributors. They will look at opportunities, he says, but he is "not expecting a huge exodis. The expiration of tariffs is not expected to have a big impact."