FINDLAY, Ohio—By successfully implementing its strategic plan, Cooper Tire & Rubber Co. enjoyed record sales and operating earnings for both the fourth quarter and full year of 2012, company executives said in a Feb. 25 teleconference.
Net income fell for the quarter and year, however, due largely to income tax charges.
Fourth-quarter operating profit for Cooper totaled $124.2 million, up $65 million from the same period in 2011, the company said. Earnings were 11.7 percent of sales of $1.06 billion for the quarter.
Net income attributable to Cooper for the quarter was $72.9 million, Cooper said, or about one-third of the $209 million in net income the company reported in the fourth quarter of 2011.
The 2011 fourth quarter results, however, were enhanced by a one-time, non-cash impact of $177 million in 2011 caused by the release of most of the company's valuation allowance against U.S. deferred tax assets and related expense effects. Without this impact, 2011 fourth quarter income was $32 million, Cooper said.
Cooper's net sales for 2012 rose 7.5 percent to $4.2 billion, an increase of $293 million from 2011. Operating profit for the year was $397 million, or 9.5 percent of sales.
Net income attributable to Cooper fell 13.1 percent to $220.4 million from $253.5 million the year before.
The company said it ended the fourth quarter with $352 million in cash and cash equivalents, an increase of $118 million over the prior-year quarter.
In the teleconference, Cooper CEO Roy Armes credited Cooper's employees with keeping both sales and earnings strong in an uncertain economy.
“Cooper Tire rose to the challenge in 2012,” Mr. Armes said. “We achieved nearly all our goals for our ongoing strategic plan.”
The Discoverer and Zeon RS3A tire lines continued to be profit leaders for Cooper in 2012, according to Mr. Armes. The Zeon RS3A became Cooper's first North American original equipment tire fitment, on the 2013 Ford Focus and Focus Titanium.
“We will consider OE fitments if they are mutually beneficial and will make us a better company,” he said. The OE segment of Cooper's business will grow, but it will not be a major part of the business, he added.
Breaking down performance in the tire maker's business units, North American Tire Operations had fourth-quarter 2012 sales of $811 million, up 5.2 percent from the fourth quarter of 2011. Higher unit sales and higher price and mix were responsible for the increase, the company said.
Cooper's unit shipments for the quarter increased 2 percent, about the same as the Rubber Manufacturers Association's general figures for the quarter, the company said. The tire maker's light vehicle tire shipments were flat, but that compared with RMA figures showing a 3-percent drop in that segment.
Operating profits for North American Tire Operations nearly tripled to $103.2 million, or 12.7 percent of net sales for the quarter, Cooper said.
The gain included a $51 million decrease in raw material costs, $19 million in improved price and mix, $10 million in manufacturing efficiencies and higher unit volumes of $3 million, the company said.
Full-year sales for the unit hit a record of $3.1 billion, up 9.1 percent over 2011, according to Cooper. Operating profit nearly quadrupled, to $296 million from $77.4 million.
In International Tire Operations, sales fell 9.2 percent in the fourth quarter, to $341.6 million from $376.2 million. Higher unit volumes of $25 million and favorable currency translation of $2 million were more than offset by lower pricing and mix of $62 million, the company said.
Cooper's operations in Serbia and general growth in Eastern Europe contributed to a 23-percent increase in tire shipments in Europe during the quarter, the company said. However, reduced passenger tire exports led to a 2-percent decrease in Asian sales volume of 2 percent, it said.
Operating profits for the quarter in International Tire Operations rose 11.4 percent to $32.2 million, compared with $28.9 million for the fourth quarter of 2011, Cooper said.
For the year, sales for the segment totaled $1.6 billion, up 1.2 percent over 2011. Operating profits grew 39.8 percent to $143.6 million.
In the teleconference, Mr. Armes said he expected 2013 capital expenditures of between $195 million and $215 million, mostly for investments in the company's new Enterprise Resource Planning system and its Serbian and Chinese operations.
However, the impact of these expenditures on the company's bottom line should dissipate as the year progresses, he said.
Cooper will unveil its strategic plan through 2017 later this year at an investor meeting in New York, according to Mr. Armes. However, the emphasis of Cooper's strategic planning is likely to remain the same, he said.
“We're not out to grow market share—we're out to improve our profitability,” he said.