FINDLAY, Ohio (Feb. 16, 2005) — Despite 4-percent higher sales during the fourth quarter, Cooper Tire & Rubber Co.'s North American tire operations suffered a 40.1-percent drop in segment operating profit on lower unit volumes, 16 percent higher raw materials and other factors.
Overall, Cooper reported net sales in the quarter of $541 million, up 5.1 percent from last year. Net income from continuing operations fell 58.4 percent to $3.2 million. Including income from discontinued operations and the gain from the sale of Cooper-Standard Automotive, the tire maker posted net income of $133.2 million vs. $28.2 million in 2003.
For the full year, Cooper's sales rose 12.4 percent to $2.08 billion. Overall net income surged 173 percent to $201.4 million.
Cooper said quarterly net sales in its tire unit grew based on improved pricing and product mix, though it was offset partially by lower overall unit volumes. Cooper said its shipments of premium sport-utility vehicle and light truck tires outpaced the industry, growing at more than 3 percent. Unit shipments were down overall, primarily from lower shipments of economy and broadline tires.
Profit in the segment also was hampered by the lower volume, the company said. High raw material costs, product liability expenses and increased production complexity were somewhat offset by improved price and mix. The production complexity is largely the result of Cooper's schedule for new product introductions, namely 1,200 new SKUs introduced in 2004.
“Significant” plant expansions will continue in 2005 at the Albany, Ga., facility.
For the full year, tire operations' net sales grew 11.3 percent to $1.87 billion, while net profit fell slightly to $76 million.
“We are excited about our opportunities in 2005 as a whole,” said Thomas Dattilo, chairman, CEO and president. “We will continue to pursue strategic investments in the tire business and advance our Asian strategy, including the development of our relationship with Kumho following our recently announced acquisition of 11 percent of them. We are confident that our strategy and the execution of our plans will drive long-term shareholder value.”
Mr. Dattilo forecast earnings in the first quarter of 1 to 3 cents per share. Per share earnings from continuing operations were 4 cents per share in the fourth quarter.