Cooper Tire & Rubber Company has reported a third quarter 2016 net income of US$49 million, or diluted earnings per share of $0.90, compared with $53 million, or $0.93 per share, during the same period of last year. The quarter included a non-cash pension settlement charge of $11.5 million related to lump-sum distribution of benefits offered to certain former employees. Excluding the non-cash pension settlement charge, diluted earnings per share for the third quarter would have been $1.04.
Third quarter net sales amounted to $751 million, a decrease of 4.0 per cent; results were negatively impacted by $17 million of unfavourable price and mix, primarily due to net price reductions related to lower raw material costs, as well as $13 million of negative foreign currency impact and $1 million from lower unit volume.
Operating profit for the three months to 30 September was $78 million, compared with $82 million for the same period last year. Operating profit decreased as a result of the non-cash pension settlement charge of $11.5 million, $9 million of higher manufacturing costs and $1 million of negative foreign currency impact. These declines were partially offset by $8 million of favourable SG&A expense, as well as $9 million of favourable raw material costs, net of price and mix. Raw material costs are inclusive of tariffs, including the preliminary TBR duties.
“Cooper generated another strong quarter of operating profit, achieving a record for the first nine months of this year,” stated Brad Hughes, Cooper Tire & Rubber’s president and chief executive officer. “Excluding the $11.5 million pension settlement charge, our third quarter operating profit would have been 11.9 per cent of net sales, a result that continues to be above our medium-term goals. Despite a decline in net sales, our Americas segment generated operating profit margin of more than 15 per cent, including the impact of the preliminary tariffs on truck and bus radial tyres imported from China into the United States.
“The International segment, which continued to improve its performance, delivered an operating profit for the second consecutive quarter,” Hughes continued. “Cooper continues to execute on our strategy to deliver shareholder value, including returning cash to shareholders through our quarterly dividend and share repurchases, which totalled more than $28 million during the third quarter.”
For the full year, Cooper Tire & Rubber expects to grow unit volumes globally and “modestly” increase operating margin above 2015 levels. The company’s International segment, excluding the impact of acquisitions, is expected to perform better than originally anticipated for full-year 2016.
“The Cooper business model remains a solid foundation for growth and continued profitability,” commented Hughes. “We continue to successfully shift our mix to higher-margin products, including growing the Cooper brand, and we remain focused on improving our cost structure by optimising our global manufacturing footprint and investing in automation. These initiatives are driving our strong operating margins in the Americas segment. In China, we are rapidly growing our OE business and expanding our TBR business, which will be aided by the pending acquisition of a majority interest in GRT.
“Looking ahead, we expect that the benefit of lower raw material costs will moderate, and global markets will continue to be very competitive,” the tyre maker’s president and CEO continued. “We will stay focused on continuing to generate strong profit performance across the business as well as driving unit volume growth, which we expect to be led by growth in Latin America and Asia. I am proud of the Cooper teams around the world for staying committed to the effective execution of our strategic plan, which is essential as we work to achieve the ambitious goals we have for Cooper’s growth and profitability in the future.”
Further information about Cooper Tire’s Q3 2016 results can be found in Tyrepress.com’s company profiles and reports section.
Category: Company News