Cooper Reports Q3 Profit & Record Sales
Cooper Tire & Rubber has reported a net income of US$30.2 million or 48 cents per share for the quarter ended September 30, 2007, a marked contrast with last year’s third quarter loss of just under $25 million. Income from continuing operations increased by more than $41 million from a loss of $23.5 million for the same period last year, resulting in earnings per share of 29 cents from continuing operations. Income from discontinued operations also contributed $12.4 million, or 20 cents per share, for the quarter. The continued growth in earnings was accompanied by a new record of $767.7 million in sales for the quarter, an 11 per cent increase over the same period last year.
The company attributes its more positive quarterly results to improved pricing in North America and increased tyre unit sales for its international segment. The improvement was also supported by Cooper’s ongoing cost and profit improvement initiative implemented throughout the year. As a result, operating profit improved to $32.7 million in the third quarter of 2007, compared with an operating loss of $5 million in the third quarter of 2006. For the nine month period ended September 30, 2007, the company’s net income improved to $68.6 million on $2.2 billion of sales. This is a $119 million improvement in net income over the same period a year ago.
In its home market, Cooper’s tyre operations reported sales of $576.2 million in the quarter, up 10 per cent compared with $525.8 million in the third quarter of 2006. This increase was driven by improved pricing, as well as increased unit volumes in sport utility vehicle and broadline tyre segments. North American operations increased market share during the quarter versus third quarter 2006, and Cooper’s unit shipments of light vehicle replacement tyres in the US were up approximately 2 per cent in the quarter over the same period last year.
North American Tire generated $26.9 million in operating profit from continuing operations in the quarter, or an increase of $27.9 million compared with the third quarter of 2006. For the nine-month period ended September 30, 2007, North American operations generated $74 million of operating profit on $1.6 billion of net sales, an improvement of $103 million over operating profit during the same period a year earlier.
Cooper’s International Tire Operations reported sales of $235.8 million in the quarter, an increase of 22 per cent compared with the third quarter of 2006. Cooper Europe continued to improve its operating profit, while the segment’s sales in Asia increased by 32 per cent, driven by a 28 per cent increase in unit sales and favourable pricing improvements over the same period last year.
Operating profit for the International segment was $7.2 million in the third quarter of 2007, compared with $3.1 million in the third quarter of 2006. The segment increased operating profit on stronger sales and improved pricing, partially offset by higher raw material costs. Production continued to ramp up at the Cooper-Kenda joint venture plant in China. Operating profit for the segment improved to $25 million for the first nine months of the year. This is a $10.8 million increase over the same period last year.
Commenting on the results, Cooper president and CEO Roy Armes said, “During the third quarter we continued to deliver improved results to the top and bottom lines. People throughout the organisation have been focused on executing the strategies that we previously identified and are excited about what the future holds for the company. We aren’t satisfied with where we are, but we are pleased with what we’ve accomplished over the last year. North America had another quarter of dramatically improved operating profit, and our international segment has continued its impressive growth. This global growth has been accompanied by an improved balance sheet as our margins improve and we continue to focus on inventory management. As we launch into the fourth quarter, we expect to continue with our improvements, I have confidence that the employees at Cooper will execute to our expectations.
“The story at Cooper during the first nine months of 2007 has been continued improvement and positive momentum,” Armes continued. “There are always concerns or risks regarding raw material costs, which are at high levels and trending upward, as well as economic and industry effects. We believe that we will be able to continue operational improvements in the fourth quarter and inventory levels will remain at low levels throughout the rest of the year.
“Overall, we expect to build on the momentum we have established during 2007. We are pleased with our results thus far, but are determined to continue reviewing and improving on all aspects of our company so that we can provide the greatest returns possible for all of our stakeholders.”