FINDLAY, OH — Cooper Tire & Rubber has reported all-time record high sales of $974 million and a 56 percent increase in net income for the quarter, which ended on March 31. The record sales represent a 23 percent increase compared to the same period a year earlier. Net income increased by 56 percent, to $24 million, compared to $15 million in the first quarter of 2003.
“Our Tire Group set a first quarter record in sales but continued to face headwinds from raw material costs, just as we had said and expected, and that impacted operating margins,” said Tom Dattilo, chairman, president and CEO of Cooper Tire. “Our Automotive Group had an outstanding quarter and set records in both sales and operating profit. Successful new business launches last year and more efficient operations made that possible.”
Sales for Cooper’s tire operations saw a first-quarter record of $485 million, an increase of 23 percent compared to the $396 million achieved in the first quarter of 2003. This increase was driven by a 12 percent increase in tire unit volumes and expanding customer and product mix, said the company. Net sales of high performance and ultra-high performance tires increased by 47 percent during the quarter. Sales of P-Metric SUV tires increased by 52 percent, and light truck tire sales increased by 27 percent compared to the same period last year.
Operating profit was slightly less than $16 million in the first quarter compared to slightly more than $16 million last year. Increasing raw material costs reduced operating profit by $18 million during the quarter, and product liability insurance and litigation costs were $9 million higher compared to the first quarter of last year. These two items combined to essentially offset the positive impact of higher sales volume, Cooper said.
The Tire Group continues to operate at about 100 percent production capacity and is engaged in capacity expansion projects in all of its plants in North America as well as in Asia in order to meet future projected demand. Cost reductions in the Tire Group exceeded $10 million in the quarter and are on track to reach the plan of $49 million for the year.
“Our sales volumes are going to be strong, we are seeing significant improvement in our plants and we are finding ways to reduce costs to offset the headwinds of raw materials and product liability expense,” said Dattilo. “Raw material costs are likely to remain high throughout the year, but the tire price increase we implemented in February and additional price increases planned for June will help offset that impact. We will continue to increase our production capacity to keep up with strong demand. Expansions are under way in our North American tire plants, and the implementation of our Asian strategy will see the construction begin on our joint venture tire plant in China.”
He added: “We continue to explore the possibility of a sale of our automotive operations, and we are finding significant interest. But, for now, we remain focused on running this business and meeting our targets for increasing sales and implementing cost reduction initiatives. We expect the economy to continue to improve throughout the year and North American light vehicle production to reach or slightly exceed 16 million units.”
Dattilo concluded that Cooper’s Tire Group would drive much of the continued strong earnings results and efficiencies that he expects to see this year.
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