FINDLAY, Ohio (Feb. 6, 2003) — After racking up “very solid” numbers for fiscal 2002, Cooper Tire & Rubber Co. expects to improve its fiscal 2003 earnings over the $111.8 million net profit it reported for 2002, provided the economy picks up in the second half of the year.
For the year ended Dec. 31, Cooper reported increases in net earnings, operating profit, sales and cash flow, while at the same time reducing debt and trimming inventories. That prompted Thomas A. Dattilo, chairman, president and CEO, to say: “We set certain goals at the beginning of the year, and we achieved them…. Each of these (achievements) is a solid accomplishment. Combined they are outstanding.”
In the Tire Group, Findlay-based Cooper boosted operating profit 87.7 percent to $137.4 million while sales increased 3.8 percent to $1.77 billion. Unit shipments outpaced dollar sales volume; tire unit sales rose nearly 5 percent overall with units shipped to regional retailers up more than 30 percent and Cooper brand units improving nearly 6 percent in North America, the company said.
While the operating profit gain on paper looks good, Cooper pointed out the 2001 earnings figure was reduced by $72 million in class-action lawsuit settlement charges, leaving the 2002 figure slightly below that in 2001.
Cooper credited this change in operating profit to the positive impact of higher tire sales being offset by less favorable product and customer mix, operating at less than full capacity (to support inventory reduction efforts) and higher product liability costs.
For the year, Cooper reported $111.8 million in net earnings on sales of $3.33 billion, vs. $18.2 million and $3.15 billion a year ago. However, the results for 2001 included the impact of the expenses related to the settlement of class-action suits that had been filed against Cooper in 2000; without these expenses, 2001 net income would have been $63 million, Cooper said.
For the quarter ended Dec. 31, Cooper reported a 49.7-percent increase in net income to $23.5 million as sales shot up 8.4 percent to $841.6 million. Tire operations sales rose 8.6 percent to $457.6 million, as unit volumes increased 10 percent. Operating profit fell 25 percent to $29.7 million, for the same reasons mentioned earlier.
For the current year, Mr. Dattilo said: “Challenging operating conditions in our industries will likely persist in the first half of 2003. Tire demand appears to be soft, especially in comparison to the strong first quarter of 2002. Some pre-buying in advance of the January price increases probably pulled some tire sales forward.
“Raw material prices will also be higher in the first half. But we are optimistic about the second half of the year as we expect economic conditions to improve and tire demand to return to near normal levels. We are also increasingly confident in the sustainability of light vehicle production levels.
“We will have to work hard to offset some of the increasing costs our industries are facing. Recently implemented tire price increases will help to offset raw material costs. New products and increasing demand for replacement tires as well as new automotive business launches will allow us to improve our capacity utilization and overall operating efficiency. We are confident that over the course of the year improving economic conditions and improvements in our own performance will allow us to achieve results even better than in 2002.”
At the same time, Cooper declared a dividend of 10.5 cents per share, payable March 28 to shareholders of record on March 3. This is Cooper's 124th consecutive quarter of issuing a dividend.