FINDLAY, Ohio (May 3, 2006) — Cooper Tire & Rubber Co.'s first quarter sales rose 16.1 percent to a record $596.6 million, but high raw material costs and reduced production drove both the company overall and its North American tire division to a net loss.
Cooper said its acquisition of majority ownership in Cooper Chengshan (Shandong) Passenger Tire Co. Ltd. and Cooper Chengshan (Shandong) Tire Co. Ltd.—finalized in February—increased quarterly sales by $48 million. Higher prices, improved product mix and higher unit volumes in North America and Europe added $39 million in sales.
Overall the company posted a net loss of $5.15 million, down from a net profit last year of $5.22 million. The loss from continuing operations also deepened to $5.47 million from $1.04 million last year.
In North America, net sales rose 7.1 percent to $495.9 million, but the unit posted an operating loss of $5.91 million, down from earnings of $6.45 million a year ago.
Cooper said in North America it was hit by $29 million in higher raw material costs and $5 million in higher utility costs. In January and February Cooper also reduced mold and production levels at its Texarkana, Ark., plant because of weak market conditions. Also, in late February Cooper converted its Findlay plant to five-day operation from seven-day operation. These production changes cost about $6 million, the tire maker said.
Cooper's unit sales overall were up 1 percent in North America. Unit sales of sport-utility vehicle, performance and light truck tires grew 15, 17 and 2 percent, respectively. Cooper said it gained share in all replacement tire categories during the quarter.
“We had good momentum in terms of sales for the quarter as we outpaced the industry, increased market share and improved our overall product mix in North America,” said Chairman and CEO Tom Dattilo. “…However, the North American replacement tire market remains very competitive, and raw material prices continue to impact our results. The price increases we have instituted in the past several months have fallen short of covering rising material costs.”
Mr. Dattilo said Cooper raised prices effective April 1, but more increases will be necessary if natural rubber and oil prices remain elevated.