Cooper nets record Q1 operating profit

FINDLAY, Ohio (May 9, 2013) — Cooper Tire & Rubber Co. reported record first quarter operating profit of $96.7 million, despite a 12.5-percent drop in sales to $861.7 million. Net income for the quarter more than doubled to $62.8 million.

"We carried the momentum of record financial results from 2012 into the first quarter of 2013…," said Cooper Chairman, CEO and President Roy Armes, who anticipates a "challenging" second quarter due to continued softness in global tire demand and weakness in the economy.

Cooper said its first quarter operating profit benefited from $90 million in lower raw material costs and $19 million in lower manufacturing costs. The latter reflected labor peace during the 2013 period; in 2012 the company's Findlay plant was hit by a nine-week labor lockout during the quarter.

Significant offsets to profit included $44 million of unfavorable pricing and mix and $15 million in lower volumes, Cooper said.

Cooper's North America Tire Operations more than tripled its segment profit to $71.4 million despite a 13.7- percent slump in sales to $602.3 million.

Cooper said its light vehicle tire shipments in the U.S. fell 14 percent during the quarter compared with the overall market, which dropped about 1 percent.

The improved segment profit includes a $59 million drop in raw materials costs, $6 million in lower product liability costs and $23 million in lower manufacturing costs, of which $29 million was attributed to the non-recurrence of the Findlay labor action, partially offset by manufacturing inefficiencies related to lower factory utilization.

The company said raw material prices remained flat from the fourth quarter of 2012 to the first quarter of 2013 and prices are expected to decrease 1 percent in the second quarter. However, long-term raw materials prices are expected to trend higher with periods of volatility, Cooper said.

Capital expenditures for 2013 are expected to be between $195 million and $215 million, which are near-record levels.

"Looking ahead to the second quarter, we continue to be cautious about volumes as the weak global economy and sluggish tire demand look to continue," Mr. Armes said.

"In addition, we expect that the impact of first quarter inventory adjustments by key customers may extend into the second quarter, but to a lesser degree. Beyond the second quarter, we expect volumes to continue to be challenged by industry and economic conditions."