Cooper suffers Q4, fiscal 2008 losses

Tire Business staff report

Findlay, Ohio - Cooper Tire & Rubber Co. reported fourth quarter and fiscal 2008 net losses of $143.5 million (Euro 112.7 million) and $219.4 million, respectively, as sales plunged 16.9 percent in the quarter and 1.7 percent for the year.

Cooper did not release a forecast for 2009, other than to say it is taking actions it deems are “appropriate and will strengthen our business longer term.”

Cooper attributed the losses to high raw material cost increases and production curtailments related to the collapsing demand, but noted the fourth quarter loss also includes pretax restructuring charges of $76 million related to the impending closing of its Albany, Georgia, plant and a $31 million pretax charge for impairment of goodwill in the international segment.

The operating result also was in the red for the quarter and year, at $163.8 million and $216.6 million, respectively. Sales slid to $635.8 million in the quarter and $2.88 billion for the year.

Cooper's North American tyre operations reported operating losses in the quarter and year of $109.1 million and $174.1 million, respectively, vs. earnings of $45 million and $119.4 million. Sales fell 12.7 in the quarter to $510.8 million and 3.1 percent for the year to $2.14 billion.

Cooper said the sales declines were most significant in the broadline and light truck product segments and were particularly acute in the private brand distributor channel. The company claims its Cooper brand performed well in the US compared with industry shipments and it also expanded its market presence in Mexico and Canada.

Raw material cost increases negatively affected quarterly results by $79 million compared to the prior year quarter, Cooper said, but this was offset partially by price and mix increases of $49 million.

Cooper noted the costs associated with closing the Albany plant later this year will be lower than originally expected by about $30 million. The firm took a write-down charge of $76 million during the fourth quarter; total cost should be $120 million to $145 million.

Cooper's international tyre operations also were in the red, reporting operating losses of $50.2 million and $30.1 million for the quarter and year respectively. Sales plunged 23 percent in the quarter to $175.6 million but were up 10.6 percent for the year to $975 million.

Commenting on the results, Cooper ceo Roy Armes said, “We are focused on improving our global cost structure and are beginning to see some of the benefits from these actions; unfortunately much of what we have done is camouflaged by current market conditions.

“While the near term outlook is pressured by macroeconomic events around the globe, we believe the actions we are taking are appropriate and will strengthen our business longer term. We have been able to maintain considerable cash reserves to support our plans, and we maintain unused existing credit facilities. We are repositioning Cooper to emerge from the current recession a stronger competitor.”

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Original article from Tire Business (a Crain publication)