FINDLAY, Ohio (Aug. 4, 2008) — Higher raw material and utility costs and weak demand in North America contributed to Cooper Tire & Rubber Co.'s second quarter net loss of $22.2 million.
The Findlay-based tire maker posted record sales of $772.9 million for the quarter ended June 30, a 5.9-percent rise from 2007. The higher sales were driven by pricing and improved mix that were partially offset by decreased tire unit volumes in North America.
Raw material shortages also caused Cooper to temporarily reduce North American production during the quarter. This curtailment triggered $13 million of costs for the quarter, primarily related to unabsorbed overhead.
“We are still committed to the long-term goals we established in our strategic plan,” said CEO Roy Armes. “These include establishing a sustainable and cost competitive supply of tires, profitably growing our business and enhanching our organizational capabilities.”
For the first six months of 2008, Cooper reported a record $1.45 billion in net sales, but the recorded net losses were $20.5 million during the same period compared with net income of $38.3 million in 2007.
In North America, the tire maker posted sales of $547.5 million for the quarter, a 2.7-percent jump from a year ago due to increased pricing and improved product mix, offset by 13 percent lower volumes. The lower volumes came from the broadline tire area, Cooper said. However, the company's market penetration of light truck tires increased during the quarter as the Cooper brand increased its market penetration as compared to the Rubber Manufacturers Association's shipments report.
Segment losses for the North American tire division were $21.9 million, down from earnings of $20.7 million in 2007.
Cooper noted the raw material costs were partially offset by price hikes of $32 million. Other negative factors in North America that impacted results included product liability expenses that jumped $3 million from the same period last year and the cost of maintenance projects during production shutdowns.
The International Tire operations reported operating profit of $5.94 million during the quarter despite raw material costs and start-up costs for production in Asia. Sales climbed 20.7 percent to a record $283 million.
Mr. Armes noted that developments in the macroeconomic environment have caused Cooper to be guarded in its profitability expectations for 2008. The tire maker also has cut its capital expenditure plans for the year.
However, Mr. Armes also said Cooper is improving its cost structure by working towards efficiency and is excited about its recently announced production investments in Mexico.
“While we recognize that we are facing strong headwinds as an industry, the actions we are taking will prepare us to capitalize on future opportunities,” he said.