Cooper Tire & Rubber Company saw a net income of $12 million for the quarter ended March 31, 2010, a $33 million improvement from the same period in 2009, according to financial reports released recently.
The tire manufacturer also reports net sales were $754 million, a substantial increase of $183 million, or 32 percent, from the prior year. Operating profit was $33 million for the quarter, a $49 million improvement compared with a loss of $16 million in 2009, while it saw a net income of 19 cents per share during the quarter on a diluted basis.
"We were extremely pleased with the improved volumes and manufacturing performance achieved during the first quarter of 2010. The increases in volume were the result of better industry conditions combined with successfully positioning the company for growth," says Roy Armes, CEO. "The momentum also continued in our operations where our efforts to be more cost competitive were again visible on the bottom line. While our outlook remains cautiously optimistic, we recognize that raw material costs continue to be volatile and have a significant impact on our results."
Results during the quarter included restructuring charges of $8 million, related to the closure of the Albany, Ga., facility, a decrease of $7 million from the first quarter of 2009.
Stronger results for the quarter when compared to the prior year were driven by improved volumes and increased utilization of manufacturing capacity, the company states. Partially offsetting the positives were a negative net price and mix to raw materials relationship and higher products liability charges.
"We expect that raw materials will continue to increase and remain elevated in the near future. As a result we announced a price increase in North America on light vehicle tires of up to 7.5 percent, effective June 1, 2010," Armes says. "I am very proud of the efforts and accomplishments of the Cooper team during this period. Our focus remains on prudent management of our critical resources to drive shareholder value. "
North American Tire Operations
North American Tire Operations sales were $532 million during the first quarter, up significantly from 2009 net sales of $439 million. Total light vehicle tire shipments for Cooper's North America segment in the United States increased by 19 percent, outpacing the total industry shipment increase of 13 percent reported by the Rubber Manufacturers Association. This improvement occurred across nearly all product segments as the company was able to increase market share, it states.
Operating profit of $14 million for the first quarter rose by $17 million when compared with the same period in 2009. Excluding restructuring charges, which dropped by $7 million, the improvement from the prior year was $10 million. Manufacturing operations improved by $29 million, primarily as a result of better capacity utilization. Higher volumes improved results by $22 million. Favorable pricing and mix contributed $8 million. Other factors including lower selling, general and administrative costs contributed $4 million.
Partially offsetting these impacts were a $29 million increase in raw material costs and charges to products liability that reduced profits by $24 million. The higher products liability costs primarily related to increasing reserves after an adverse verdict was issued for a single case which Cooper reports that it intends to appeal.
International Tire Operations
Cooper's International Tire Operations reported $294 million in sales, a dramatic increase of $127 million, or 77 percent, compared with the prior year same quarter. This result reflected volume increases partially offset by negative price and mix. Asian operations increased sales volumes by 102 percent, while European operations reported an increase in unit sales of 20 percent.
The segment's operating profit increased to $23 million for the first quarter, an improvement of $25 million from the prior year. This increase resulted from improved volumes, which contributed $20 million, positive price and mix of $9 million, and better production utilization and manufacturing costs of $6 million. These positives were partially offset by higher raw material costs of $11 million.
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