By LOU WILIN
Cooper Tire & Rubber Co. posted a profit for the fourth quarter, and for all of 2013, despite its takeover troubles last year.
Profits did deflate last quarter by 73 percent, to $19.6 million, because of cheap Chinese tire imports and troubles at a Cooper joint venture plant in China.
Earnings in the October-December quarter amounted to 31 cents per share, the company reported Friday.
“There was a lot of uncertainty going into the quarter regarding the earnings, and they were better than expected,” said Kirk Ludtke, managing director for CRT Capital Group, Stamford, Conn.
Cooper Tire stock rose nearly 7 percent on Friday, closing at $24.36.
Quarterly profits were reduced by $27 million when a joint venture plant in China refused to make Cooper Tires, protesting the proposed sale of Cooper to Apollo Tyres of India. Other quarterly costs related to the failed Apollo Tyres deal totaled $9 million.
Sales fell by 19 percent in the October-December quarter.
For all of 2013, profit plummeted by nearly 50 percent to $111 million, or $1.73 per share. Sales declined 18 percent to $3.44 billion, Cooper reported.
Despite all that, 2013 was one of the biggest years for operating profit in Cooper Tire’s history, said Chief Executive Officer Roy Armes.
“We were able to end the year with the second best annual operating profit result in our company’s 100-year history, excluding the divested automotive group,” he said. “And even if you include the automotive group, it was our fourth best year in terms of operating profit.”
Cooper did that even as it sold fewer tires, Armes said.
“What took place in 2013 did serve to demonstrate the strength and resilience of our business model, which allowed Cooper to ride out the many unique circumstances and still produce a solid profit,” he said.
A stronger first half of 2013 helped. Nine and a half cents on every dollar of sales became operating profit in the first half of 2013. The margin slipped to 5.5 cents on the dollar in the last quarter.
Unfavorable prices and tire mix reduced profits last quarter by $68 million, the company said. Production curtailments at North American plants reduced profits by $11 million. Those declines were partly offset by $31 million less in raw material costs last quarter.
Sales of fewer tires unrelated to the problems in China decreased profits by $8 million compared with the same quarter a year earlier.
Operating profit in North America fell 66 percent to $34.9 million for the fourth quarter, and sales declined by 23 percent to $628 million.
Cooper sold 10 percent fewer car, light truck and sport utility vehicle tires in the United States in the fourth quarter. The tire industry sold 2 percent more. For 2013, Cooper sold 13 percent fewer car, light truck and sport utility vehicle tires in the United States. The tire industry sold 4 percent more.
Cheap Chinese tire imports wrested sales from Cooper, and Cooper was slow to react with price cuts, Armes said. Also constraining sales were troubles at the joint venture plant in China, which limited the availability of tires in the U.S. Also, implementation of new inventory software caused inefficiencies in shipping tires.
In losing sales to competitors, Cooper was forced to reduce prices and sacrifice profit margin.
Five and a half cents on every dollar of sales became operating profit last quarter. A year earlier, nearly 13 cents on every sales dollar became operating profit.
International tire operations
Operating profit dropped by 33 percent to $21.7 million in the fourth quarter. Quarterly sales declined by 17 percent to $282.8 million.
Cooper Tire sold 13 percent fewer tires in Asia due to the problems at the joint venture plant in China and fewer exports. Cooper sold 19 percent fewer tires in Europe due to difficult market conditions.
Profit margins overseas also declined. Nearly eight cents on every dollar in sales became operating profit last quarter. A year earlier, 9.4 cents on every sales dollar became operating profit.
Wilin: 419-427-8413 Send an E-mail to Lou Wilin
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