Cooper Standard hopeful of automotive recovery, plans more cost-cutting

Northville, Michigan – Cooper-Standard sees grounds for optimism this year despite posting year-on-year declines in sales and earnings for 2021 and signalling further cost-cutting measures in the months ahead. 

The US-based company posted a net loss (adjusted EBITDA) of $8.0 million for 2021 on sales of $2,330.2 million – about 2% below prior-year revenues, on which it made a profit of $36.7 million. 

The sales decline in 2021 was primarily due to the sell-off of certain business operations in Europe and India in 2020, the company pointed out. 

Officials took encouragement from the fourth quarter, which saw a positive adjusted EBITDA of $2.0 million on sales up 14% quarter-on-quarter to $601.3 million, the company’s 17 Feb results statement shows.

But, while earnings in the final quarter marked a $35.9-million improvement on the third quarter, the adjusted EBITDA figure was still far below the $57.0 million recorded in the last three months of 2020.  

Full-year earnings were impacted by items, such as $15 million of unfavorable volume and mix – largely linked to microchip shortages among automotive OEMs – $30 million in increased material costs, and $26 million from wage increases.

The negative factors more than outweighed gains from better pricing and lower selling, administrative and engineering (SGA&E) expenses. 

“Headwinds from increased material and labour costs remain and we have made progress in our negotiations to recover some of those increases in 2022,” said Jeffrey Edwards, chairman and CEO, Cooper Standard. 

Edwards also reported that OEM production schedules had started “to stabilise and volumes improve during the fourth quarter, compared to what we saw in the second and third quarters of 2021.” 

Cooper Standard, he added, anticipates “further improvement in production volumes throughout the year, especially in the second half, which we expect will enable us to drive improved margins and cash flow going forward.”

In its release, the company said it remained focused on reducing ongoing costs through improved operating efficiency and further “right-sizing” its operating footprint, overhead expenses and staffing levels. 

In 2021, these initiatives resulted in a combined cost savings of around $81 million, Cooper Standard adding that “further restructuring actions and other cost savings initiatives are anticipated in 2022.”

During 2021, the company said it trimmed $33 million off costs through manufacturing efficiency programmes, reduced SGA&E expenses by $32 million compared to 2020, and made $16 million in savings from restructuring actions.

Cooper Standard shares closed at $14.49 on the NYSE on 18 Jan – continuing a sharp decline from levels of over $27 seen in mid-January.