FINDLAY, Ohio (April 20, 2005) — While Cooper Tire & Rubber Co. posted a 7.1-percent gain on net sales in the first quarter, the Findlay-based tire maker's net income from continuing operations fell to a loss of $1.04 million, in part from a strike at its Texarkana, Ark., plant.
Cooper reported record net sales of $514.1 million, up from $480 million last year. But the net income loss in the quarter was in contrast to a gain of $2.18 million in last year's period. Counting discontinued operations—the company sold its Cooper-Standard Automotive unit last year—Cooper's net income dropped a hefty 78.5 percent to $5.22 million from $24.3 million in the same 2004 period, although the 2005 results included an additional $6.3 million gain on the sale of Cooper-Standard.
Cooper said its quarterly results were impacted by the work stoppage in Texarkana, which began March 12 but was resolved with the ratification of a new contract by a 708-632 vote on April 10. The tire maker said costs related to the strike reached some $7 million during the quarter.
“We will continue to face challenging market conditions, higher raw material costs and the negative impact from the shutdown in Texarkana in the second quarter and the rest of the year,” said Tom Dattilo, Cooper's chairman and CEO. “Because of the strike, our inventory is somewhat lower and less balanced than we would like as we head toward the peak selling season. Supply on some lines will be tight and will likely cause us to lose some sales.”
He added that the total effect of the strike, including direct costs and lost sales, could reach 20 cents per share in the second quarter. Second quarter earnings are forecast at 1-5 cents per share.
In North American Tire, Cooper's sales increased 8.4 percent to $463.9 million while the segment's profit slipped 42.9 percent to $7.47 million. Cooper said the increase in segment sales was driven by improved pricing and product mix but was partially offset by lower overall unit volumes.
Shipments of premium performance and light truck tires grew by more than 32 percent and 8 percent, respectively, as shipments of Cooper-brand tires also increased more than 5 percent. But overall unit shipments were down on lower shipments in the economy and broadline tire categories.
The decline in its North American unit's profit was attributed primarily to the Texarkana strike, higher raw material costs and lower unit volumes. The company said higher raw material costs in North America reduced that segment's operating profit by $26 million compared with last year.