FINDLAY, Ohio (Nov. 7, 2014) — Cooper Tire & Rubber Co. reported net income of $47.7 million for the third quarter, compared with a $168,000 loss a year ago, as sales jumped 10.5 percent to $920.1 million.
The Findlay-based tire maker noted that year-over-year comparisons are not representative of the business under normal conditions as the third quarter of 2013 was impacted by:
- Labor actions at Cooper's joint venture, Cooper Chengshan (Shandong) Tire Co. Ltd (CCT), which resulted in lower production and shipments;
- Higher costs and lower volume associated with shipping inefficiencies related to ERP system implementations; and
- Costs related to a then-pending merger with Apollo Tyres Ltd., which subsequently was terminated.
”Our third quarter performance continued the solid trends we saw during the first half. Even after adjusting for the unusual issues last year, we had strong unit volume growth, particularly in the Americas segment. The 14-percent overall unit growth, along with declining raw material costs, allowed us to post an operating margin of 9.7 percent, which is at the high end of our target range,” said Roy Armes, Cooper's chairman, CEO and president.
The increase in third-quarter sales was the result of higher unit volume of $133 million, which was partially offset by unfavorable price and mix of $49 million, Cooper said. The third quarter of 2013 included $122 million in reduced unit volume associated with the supply issues at CCT.
Cooper tripled it third-quarter operating profit to $89.4 million, compared with $27.9 million a year ago. The company attributed the surge to higher unit volumes of $25 million, lower products liability costs of $5 million, and $2 million of favorable manufacturing costs compared with last year. The 2013 quarter was negatively affected by a combined $22 million from lower unit volume in both its segments and $7 million in manufacturing inefficiencies in the International segment related to the CCT labor issues, as well as $13 million of costs associated with manufacturing curtailments in the Americas segment related to the ERP implementation.
Last year's third quarter also included merger-related costs of $5 million, which were reported in selling, general and administrative costs.
Cooper's Americas Tire operations nearly doubled it operating profit to $75.6 million as sales increased 9.6 percent to $693.9 million for the quarter.