FINDLAY, Ohio (July 22, 2004) — Cooper Tire & Rubber Co., coming off record sales and earnings in the second quarter, anticipates continued results growth throughout fiscal 2004 despite high raw material costs.
For the third quarter, Cooper sees earnings of 35 to 40 cents per share, up from 29 cents a share in the third quarter of 2003.
Through the first six months of 2004, Cooper's passenger and light truck tire business has grown at nearly twice the pace of the industry, Thomas A. Dattilo, chairman, president and CEO said in conference call with analysts July 22. Cooper's shipments during that period have risen 9.8 percent vs. the industry's 5-percent growth, he noted.
Cooper's customers continue to want more tires than the company can currently produce, Mr. Dattilo told the analysts, adding that Cooper's fill rates have slipped into the 80s percentagewise as the firm works to adjust its capacity and supply relationships to meet demand for its changing product line. Cooper has been adding about two SKUs per week for the past several months, he said, and the expanded product line means new challenges in scheduling production.
The firm has accelerated the pace of its plant expansion/modernization projects to address this issue, CFO Phil Weaver told analysts, which means capital investments this year likely will exceed projections.
For the second quarter, Cooper reported record net income of $33.4 million, up 163 percent, and record sales of $991.8 million. The tire unit reported a 94.1-percent jump in operating profit, to $26.4 million, as sales surged ahead 19.2 percent, to a record $514.6 million.
Tire unit sales were boosted by a 29-percent jump in shipments of high- and ultra-high- performance tires and a 31-percent surge in sales of sport-utility vehicle and light truck tires.
For the six months, net income more than doubled to $57.2 million on 20.3-percent higher sales of $1.97 billion. Tire unit operating income rose 40.8 percent to $42.1 million as sales climbed 20.8 percent to $999.7 million.
“Raw material costs remain stubbornly high and appear to be moving yet higher through the rest of 2004,” Mr. Dattilo said in a statement. “Prices for natural rubber appear to have leveled off but steel and petroleum-based products and most other commodities we buy are still going up.
“This will continue to be a major issue for our company and our industry, and we will need to offset these higher costs through our lean savings initiatives, improving our efficiency and through additional tire price increases.”