Cooper Tire & Rubber Co. posted a 7.1-percent gain on net sales in the first quarter, while the Findlay-based tire maker reported a loss from continuing operations of $1.04 million, in part from a strike at its Texarkana, Ark., plant.
``The strike in Texarkana was very disruptive to us,'' Chairman and CEO Tom Dattilo told analysts in a conference call. ``It set us back in all of our plants and obscured the progress that we've made in the plants....We're certainly glad to have the strike behind us.''
Cooper reported record net sales of $514.1 million, up from $480 million last year. But the 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 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 (see related story, page 3). The tire maker said costs related to the strike reached about $7 million during the quarter-about $1 million from lost sales and $6 million from direct costs. Mr. Dattilo said it will take some time to get Texarkana back up to full speed. Fill rates had been in the high 80-percent range for the quarter because of the strike.
``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,'' Mr. Dattilo said in a statement. ``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 said 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.
``We do believe, without the impact of that strike, we were poised to increase our earnings into the 20 to 25 cent-maybe even above-range,'' Mr. Dattilo told analysts, adding that he believes the third and fourth quarters will be more robust than the first two.
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 deliveries fell about 2 percent on lower shipments in the economy and broadline tire categories, which is part of Cooper's strategy to move toward premium products.
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 increased material expenses in North America reduced that segment's operating profit by $26 million compared with last year.