Cooper posts second-quarter loss, expects demand to improve

Findaly, Ohio - Facing "extraordinarily" weak replacement demand in North America and high raw material costs, Cooper Tire & Rubber Co. posted an operating loss of $25.9 million in the second quarter.

Cooper reported a net loss of $20.7 million on sales of $624.8 million. The firm´s sales were up 22 percent, with most of the increase driven by Cooper Chengshan (Shandong) Passenger Tire Co. Ltd. and Cooper Chengshan (Shandong) Tire Co. Ltd. in China, which contributed $110 million in sales during the quarter.

Improved product pricing and mix in North America and Europe also contributed about $36 million to sales.

But weak replacement demand in North America and high inventories led to a company decision to reduce production during the quarter, resulting in $8 million in unabsorbed overhead expense. The company also in the quarter announced its intention to close its Athens, Georgia, retread products and race tyre plant, contributing $8 million in restructuring charges.

For the first half of the year, Cooper posted sales of $1220 million - up 19 percent - and a net loss of $25.9 million. Cooper also posted an operating loss of $30 million in the half.

Looking forward to the second half of the year, Cooper Tire & Rubber Co. expects replacement tyre demand to improve "somewhat" though raw material prices will continue to escalate.

In its second quarter earnings report, Cooper said it expects commodity price increases in the third quarter of 5-7 percent, which would amount to a 17- to 20-percent gain on a year-over-year comparison.

Cooper last instituted a price increase of up to 7 percent on all product lines in North America effective July 1. The tire maker posted a net loss in the second quarter of $20.7 million on sales of $624.8 million.

"While we are not satisfied with the results of this quarter, we are confident that our fundamental strategy is correct," interim CEO Byron Pond said in a statement. "We are putting more effort into cost reduction and other margin improvement initiatives and are confident they will improve performance.

"Our gains in market share, the growth of our high-performance and premium products and improving brand recognition will also help us put profit back on track. All of this, combined with further progress we are making in more efficient manufacturing and low-cost sourcing, will position us well for the future."

From Rubber & Plastics News (A Crain publication)