Cooper reports record operating profit of US$130 million
Cooper Tire & Rubber Company has reported record net sales and operating profits in its third quarter 2012 financial results. According to the company, sales of US$1.1 billion (up 4 per cent) were a record. The company also reported record operating profit of $130 million, $82 million higher than in third quarter 2011 results and representing 11.8 per cent of net sales. Net income was also a significant improvement on last year’s $17 million, with the company posting a third quarter record of $74 million or $1.17 per share on a diluted basis.
“Our third quarter financial results include several record performances for Cooper Tire,” said CEO Roy Armes. “Total global volume grew by 5 per cent. Once again, our US volumes grew while the overall industry declined…”
Cooper representatives reported that third quarter profits were positively impacted by lower raw material costs of $144 million, volume increases totalling $9 million and $7 million in manufacturing efficiencies. These were offset by $36 million in unfavourable price and mix, $28 million in higher selling, general and administrative costs, $7 million in higher product liability costs and $7 million in “other” costs.
Analysts: Cooper results beat estimates
Financial analysts welcomed Cooper’s results, which were broadly ahead of expectation. Third quarter earnings per share, for example, amounted to $1.17, ahead of Deutsche Bank’s estimate of $1.05 and the market consensus of $0.83. At 11.8 per cent, pre tax profit margin (EBIT) also beat expectations.
The praise, however, was also tempered with a note of caution: “While we note that quarter three was exceptional…we were encouraged by outlook comments…[Cooper] remains a controversial name, as many investors remain concerned of the expiration of Chinese tyre tariffs, raw material deflation, or weak industry demand leading to difficult pricing conditionsm,” Deutshe Bank wrote in an investor’s note dated 5 November.
But this too was balanced with positivity: “We expect Cooper to maintain strong earnings growth nonetheless, and would benefit from a number of tailwinds, including elimination of approximately $40 million in (annual) tariffs paid by Cooper. Other tailwinds should include non-recurrence of the Findlay strike ($0.31), and easy industry volume comparisons…”