Cooper 'well positioned' to benefit from market disruptions — CEO Brad Hughes

NEW YORK — Cooper Tire & Rubber Co. is "well positioned" to take advantage of the evolving marketplace for tires, CEO and President Brad Hughes told investors May 11, thus solidifying the firm's goal of achieving an operating profit of 10 to 14 percent over the coming five years.

Speaking at its Investor Day event in New York, Mr. Hughes and other Cooper executives stressed that their company is implementing strategic initiatives to leverage its position with consumers, accelerate the cadence of new product introductions and enhance consumer involvement in product development and testing.

Mr. Hughes identified three themes — the increased influence of consumers, underlying trends in the auto industry and consolidation in distribution — that are driving changes in the tire business.

"Our brand strength and attractive value proposition represent a solid foundation to build on with consumers, which is important as we move into additional growth channels," he said, noting that Cooper's emerging OE business will drive enhanced product technology and keep Cooper current with emerging trends such as electric and autonomous vehicles.

Mr. Hughes said recent consolidation moves in distribution have "created disruption and (are) pressuring long-standing relationships.

Disruption, however, creates opportunities, he added, "and Cooper is taking immediate action to benefit."

The Cooper brand, for example, had a "net promoter score" — signifying what percentage of respondents who own a specific brand would recommend that brand to a friend or family member — that was rated No. 3 in the U.S., trailing only Michelin and Pirelli.

Despite recent setbacks affected by market headwinds, Cooper is confident that 2018 will be a turning point for its financial performance, according to Ginger Jones, senior vice president and chief financial officer.

The market environment is expected to stabilize going forward, she said, allowing Cooper's key strategic initiatives to translate into tangible financial targets mid-term.

Cooper management believes the company can achieve above-market growth (low- to mid-single digits) at margins in the 10- to 14-percent operating ratio, she said, while also offering "attractive returns" on invested capital in the 14- to 16-percent range.