Cooper Tyre has reported second-quarter 2017 net income of US$45m, with net sales decreasing 2.6% to US$721m.
Operating profit was US$75m, or 10.4% of net sales, a fall of US$35m from the prior year, reflecting a volatile raw material cost, product pricing, and promotional market environment.
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“Cooper reaffirms our guidance for full year 2017 operating profit margin to be at the high end of our previously projected 8% to 10% range,” said Cooper Tyre president and CEO, Brad Hughes.
“This is based on a better than expected second quarter operating profit margin of 10.4% and a second half we believe will also come in at the high end of that range.
“The tyre industry continues to face turbulence in the US market in the form of raw material cost variability, weak trends in retail sell-out of tyres to consumers, elevated inventory in the channels and a fluid pricing and promotional landscape.
“As we continued to respond to these challenges and remained market facing with pricing and promotions, Cooper improved volumes in the US from the first quarter to the second quarter. Importantly, we ended the quarter on a strong note, growing US volume over the prior year and outperforming the industry in June.
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By GlobalData“Cooper also achieved strong year-over-year second quarter unit volume increases in Latin America and Asia, as well as in truck and bus radial (TBR) tyres.”
Second-quarter operating profit was US$1m compared to US$3m in the second quarter of last year.
The decline was driven by US$2m of unfavourable raw material costs, net of price and mix, as well as US$1m of other costs, including foreign currency impact, which were partially offset by US$1m of higher unit volume.
Outlook:
“Current industry conditions are likely to persist into the third quarter and Cooper will continue to manage our inventory levels in line with demand,” added Hughes.
“Raw material costs are trending down at present, but may remain volatile and we expect uncertain consumer demand may contribute to continued high levels of promotional activity.
“In this environment, we will remain market facing in our pricing and promotions and expect to deliver year-over-year unit volume increases in both the Americas and International segments in the second half of 2017.”
