By LOU WILIN
While its proposed sale to Apollo Tyres, of India, was deflating, Cooper Tire & Rubber Co. lost $168,000 in the July-September quarter of 2013, Cooper reported late Friday.
Cooper had earned a $74.1 million profit in the same quarter a year earlier.
Its third quarter 2013 report on Friday was nearly four months later than usual. It was delayed by the withholding of financial information by a large joint venture plant in China, which opposed the sale to Apollo Tyres.
Since the Apollo deal collapsed, the China plant has resumed production of Cooper Tires and reporting of financial results to Cooper Tire leaders.
With all the numbers in, Cooper reported Friday that sales deflated 24 percent to $832 million in the third quarter.
“As expected, the results were weak,” said Kirk Ludtke, managing director of CRT Capital Group, Stamford, Conn.
The refusal of the joint venture plant in China to produce Cooper tires during the quarter cost $29 million.
“As expected, issues surrounding the merger had a significant negative impact on our third-quarter results, and we anticipate some carryover of these negative impacts to a lesser degree in the near term,” said Roy Armes, Cooper Tire’s chief executive officer.
But that was not the worst of it.
“The core American business was down a lot” in the quarter, Ludtke said.
North American sales slipped 22 percent. North American operating profit fell 63 percent to $38.8 million. Losing sales to competitors, Cooper was forced to reduce prices and sacrifice profit margin.
In the third quarter of 2012, each dollar in sales translated into nearly 13 cents profit, but in the same quarter last year, only 6 cents became profit.
“Their profitability in recent years was inflated,” Ludtke said. “Raw materials costs had declined (in recent years) and now they are having to pass on the savings.”
While Cooper sold 14.6 percent fewer car, light truck and sport utility vehicle tires in the United States in the third quarter, the industry as a whole sold nearly 12 percent more. Goodyear Tire & Rubber Co.’s replacement tires sales were flat from a year earlier.
Still, Armes is optimistic that Cooper Tire’s fourth quarter and full-year 2013 results will look better. He said they will be reported in a couple of weeks.
“Our business model remains resilient and we will report positive operating profit and net income for the fourth quarter and second half of 2013,” Armes said. “We will also end the year with a strong balance sheet, which is important as we continue to invest in our business and focus on delivering value to stockholders … We remain confident that Cooper will successfully move past the negative near-term impacts we have described today.”
Wilin: 419-427-8413 Send an E-mail to Lou Wilin
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