Cooper Sees Q2 $22 Million Net Loss
Cooper Tire & Rubber Company has reported a second quarter loss of $22 million – or 38 cents per share – though net sales reached record $773 million, an increase of $43 million over the prior year.
The increased revenues were partially the result of pricing and improved mix offset by decreased tyre unit volumes in North America. Cooper faced intense challenges during the quarter that adversely affected operating results, including record-high raw material costs, increased utility costs, and weak market demand in North America. Raw material shortages also led to Cooper’s decision to temporarily curtail production during the quarter in North America.
The Company’s quarterly earnings were negatively impacted by an accounting limitation on the amount of losses it could tax benefit on an interim reporting basis. This negatively affected earnings by 21 cents per share on a diluted basis. Through the first six months of 2008, Cooper generated a record $1.5 billion in net sales. The recorded net losses were $21 million during the same period, compared to net income of $38 million in 2007.
The Company’s International Tyre Operations reported record sales of $283 million in the quarter, an increase of 21 percent compared with the second quarter of 2007. New products released during the quarter were well received by consumers and represent a successful return on Cooper’s strategy to increase product range away from home. The segment delivered an operating profit of $6 million despite increasing raw material costs and start-up costs related to developing the company’s presence in Asia. The segment continued to successfully ramp up the Cooper Kenda Tyre manufacturing facility in China. The Cooper Chengshan tyre facility also continued to implement projects and improved throughput during the quarter.
Roy Armes, Cooper’s chief executive officer, stated, “We are still committed to the long term goals we established in our Strategic Plan. These include establishing a sustainable and cost competitive supply of tyres, profitably growing our business, and enhancing our organisational capabilities…
“Our International Operations have been successful in developing and launching new products that the market demands. The launch of our Asian Technical Centre during the quarter will further our ability to tailor products to the rapidly developing Asian markets. In Europe we have been successful in focusing on the markets where we have a strong presence and are continuing to be successful.”