FINDLAY, Ohio — Cooper Tire & Rubber Co. reported 10.5-percent higher operating income for the quarter ended June 30, primarily on the positive effects of “favorable” raw materials costs.
Sales, by contrast, fell 1.5 percent, to $740.3 million, with revenue in the Americas down 2.7 percent. The Findlay-based tire maker attributed the sales decline mostly to negative exchange-rate changes although unit volume in the Americas dropped 3.4 percent, primarily in private-brand business.
Cooper Chairman, President and CEO Roy Armes — who is retiring in August—called the quarterly performance “outstanding,” noting that the international segment reversed an operating loss a year ago to earnings of $3.1 million this year.
Operating earnings surged to $109.9 million, raising the quarterly operating margin to a record 17.7 percent. Net income increased 18.7 percent to $70.7 million.
The company experienced higher manufacturing costs in the quarter, primarily in the Americas segment, due to the greater complexity of manufacturing more higher-value, higher-margin tires.
In the Americas unit, Cooper said its operating profit rose 6.8 percent to $116.1 million, or 17.7 percent of net sales. The higher operating profit primarily reflected $23 million of favorable raw material costs, net of price and mix. Sales fell to $116.1 million.
Cooper said its U.S. truck tire shipments jumped 23.7 percent during the second quarter, outperforming the industry.
Management expects Cooper's operating margin for the full fiscal year to be “modestly' above the 2015 level, with unit volume growth expected in each of the company's segments in the second half.
The company said it continues to make progress on its planned acquisition of a majority interest in GRT, a joint venture in China to produce truck and bus radial tires for global markets. The transaction is expected to close by year-end, pending certain permits and approvals by the Chinese government.
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