FINDLAY, Ohio (Aug. 2, 2005) — The work stoppage earlier this year in Texarkana, Ark., hurt Cooper Tire & Rubber Co.'s bottom line, contributing to losses in both the second quarter and first half of the year plus steep declines in its North American tire unit's profitability.
Findlay-based Cooper reported a net loss of $6.88 million in the second quarter, down from a gain of $34 million for the same period in 2004. For the first six months, Cooper posted a loss of $1.67 million, also down from earnings of $58.3 million last year.
The work stoppage in Texarkana, which began in March and continued into April, was resolved by the ratification of a five-year contract on April 10. But the stoppage reduced net income by about $9 million in the second quarter and about $14 million in the half, the tire maker said.
Net sales inched up less than 1 percent to $510.9 million from $509.2 million last year. Sales for the half grew 3.6 percent to $1.02 billion from $989.2 million in 2004.
In North America, Cooper's tire operations posted net sales in the quarter of $459.8 million, a slight improvement over last year's sales of $456.3 million. For the half the unit's sales increased to $923.7 million from $884.3 million. The tire maker said improvements in price and mix boosted the unit's sales, but they were almost completely offset by lower unit sales, which were the result of weaker than expected market demand for the industry overall and especially the light truck replacement market. Cooper's reduction of broadline sales to less profitable distribution channels as well as the Texarkana stoppage also contributed to lower unit sales, the company said. The company's tire unit volumes in North America are down 5 percent so far this year.
Operating profit in North America plummeted 89.7 percent to $2.26 million from $21.9 million last year. Segment profit in North America for the half also dropped 72.2 percent to $9.73 million from $35 million.
“We have worked hard to overcome some very difficult operating conditions during the quarter and the first half of the year,” said Thomas Dattilo, Cooper's chairman, president and CEO. “We made some good progress once the strike was behind us, and that progress was clearly evident in June, but it was not enough to offset the broad impact on sales and disruption of our manufacturing operations in the first two months of the quarter.”
But Mr. Dattilo said he expects to see some improvement in the second half of the year despite some “lingering impact” from the Texarkana stoppage. Cooper expects to report earnings in the third quarter of 10 to 14 cents per share.