Selling fewer tires and facing higher raw material costs, Cooper Tire & Rubber Co.’s operating profit fell nearly 56 percent from a year earlier in the October-December quarter to $24.8 million, the company reported Tuesday.
That figure would have been higher except Cooper sustained a $34 million charge related to its announcement in December that it is forming a joint venture in Vietnam.
Cooper and Sailun Vietnam Co. will be starting construction soon on a $220 million to $240 million truck and bus radial factory near Ho Chi Minh City. The added production capacity will decrease production requirements for Cooper elsewhere, resulting in the $34 million charge.
After accounting for non-operating items, Cooper Tire last quarter had a much smaller loss, $419,000, down from $42.2 million a year earlier. That was largely due to a $68.4 million reduction in Cooper’s provision for income taxes, since the Trump tax cuts.
Last quarter’s loss amounted to 1 cent per diluted share for Cooper shareholders.
Sales increased 1.7 percent from a year earlier to $770 million.
For the entire 2018 year, Cooper Tire’s profit declined nearly 20 percent to $76.6 million. Earnings for 2018 amounted to $1.51 per diluted share.
Sales for the entire 2018 year declined 1.6 percent to $2.8 billion.
But Cooper is heading on an upward trajectory, said Brad Hughes, chief executive officer.
“Our fourth quarter operating margin, excluding the ($34 million) charge, exceeded what we achieved in the third quarter, excluding the benefit from an adjustment of our product liability reserve model in that quarter,” Hughes said.
“As stated at the beginning of 2018, we expected operating margin improvement throughout the year, and we delivered on this expectation as our strategic initiatives took hold.
“As projected, in the fourth quarter we drove unit volume growth in the U.S., which was offset by volume declines in our other regions, reflecting economic and political factors,” he said. “Raw material costs improved sequentially (from the third quarter), but were up on a year-over-year basis by nearly 8 percent.”