Cooper suffers double-digit earnings drops

FINDLAY, Ohio — Despite suffering an overall 46.6-percent drop in operating earnings in the quarter ended March 31, Cooper Tire & Rubber Co. showed some healthy unit volume gains in its Latin America unit.

The Findlay-based tire maker said its results reflected a “volatile raw material cost and product pricing environment.”

Operating income fell to $48.7 million on 1-percent lower sales of $643 million, dropping the operating margin six and a half points to 7.6 percent. Sales were off despite a 2.9-percent increase in unit volume; in North America units sold were off 9.3 percent.

The company's net income fell 48.2 percent to $30.6 million.

Cooper noted that its raw materials costs jumped by $50 million in the quarter — partially offset by price and mix improvements of $8 million — and manufacturing costs were up in North America on lower production as the company managed inventory levels in a down market.

The higher costs also were partially offset by a $22 million reversal of preliminary truck/bus tire tariffs incurred in 2016.

Cooper President and CEO Brad Hughes noted that the tire maker's international segment and Latin American unit volume were up 31 and 16 percent, respectively, in the quarter while truck/bus tire sales in the U.S. jumped nearly a third over the 2016 quarter.

Sales in the Americas tire segment fell 9 percent to $531.4 million and grew 37.5 percent in the international arena to $142 million.

Looking ahead, Mr. Hughes said the company expects its unit sales to improve “relative to the industry” and that the firm expected its price increases in March would deliver more benefit over a full quarter.

“For the second half of the year,” he said, “we anticipate that the industry environment will stabilize and that our U.S. unit volume will be in line with the industry, helping Cooper achieve the high end of our 8- to 10-percent operating profit margin range for the full year.”

In February, the company extended its $300 million share repurchase program through December 2019.