FINDLAY, Ohio (Feb. 5, 2004) — Cooper Tire & Rubber Co., coming off a record-setting fourth quarter, is optimistic its results in 2004 “will significantly exceed” the company's performance in 2003.
Cooper anticipates a 10-percent jump in its unit shipments this year, vs. industry growth of 3 to 4 percent, Thomas A. Dattilo, chairman, president and CEO, told analysts in a conference call discussing the firm's results.
The anticipated growth will outstrip the company's production capacity, Mr. Dattilo said, meaning Cooper will be relying this year even more on expanded outsourcing agreements. The growth will include a jump in the firm's market share in high-performance tires to 15 percent, Mr. Dattilo said.
For the quarter ended Dec. 31, Cooper recorded all-time record sales of $966.7 million and a 20-percent increase in net income, as both the tire and automotive groups generated double-digit increases in sales.
Operating earnings in the tire business, though, fell 18.6 percent on the effects of increasing raw material costs and higher expenses for various sales rebates and customer programs.
Tire group sales in the quarter grew 13.5 percent to $519.4 million as unit sales increased 8 percent – including a 50-percent jump in sales of high-performance and ultra-high-performance tires, a 40-percent increase in sales of P-Metric SUV tires and 25-percent higher winter tire sales.
For the year, net income slipped 34 percent to $73.8 million on restructuring costs and “difficult market conditions” in the first half, Mr. Dattilo said. Full year sales grew 5.5 percent to $3.51 billion, leaving the earnings/sales ratio more than a full point below 2002 — 2.1 percent vs. 3.4 percent.
Tire Group operating profit for the year was $87.6 million, down 36.3 percent from $137.4 million in 2002 on the effects of high raw materials costs and operating inefficiencies related to lower sales volumes in the first half.
Tire sales for the year grew 5.9 percent to $1.87 billion on 2-percent unit sales growth and improved pricing. The company shipped 3-percent more Cooper-brand units and improved its presence among regional retailers by more than 14 percent.
Regarding 2004, Mr. Dattilo said replacement tire demand should remain healthy and light vehicle production solid as the economy continues its comeback.
At the same time, he cautioned that “significantly higher” raw material costs, perhaps as much as $15 million to $20 million higher, will exert pressure on tire group operating margins in the first quarter.
“But tire price increases to be implemented in February should provide some relief in the second quarter and beyond,” he said. “Additionally, higher sales volumes, continued growth in the profitable high performance and specialty light truck tire market segments, the successful implementation of our lean initiatives and our Asian strategy should have a significant positive impact on our results as the year progresses.”