Cooper
Tire & Rubber Company has reported a first quarter operating profit of $25
million despite some of the most difficult industry and market conditions experienced
in many years. Sales for the quarter reached $758 million but were down nearly
18 percent compared to $922 million achieved a year earlier when both tyre and
automotive component sales reached record levels. Net income for the quarter was
$3.6 million and earnings per share were 5 cents.
Both operating groups of the company saw significant declines in sales compared
to the first quarter of last year. Cooper Tire sales were $388 million for the
quarter, down $57 million or 13 percent. Tire unit sales declined 18 percent.
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The company reports that these declines were due primarily to the soft replacement
tyre market in North America this year and the difficult comparison to the exceptional
volumes Cooper achieved last year. In 2000, Cooper Tire’s first quarter passenger
tyre sales increased at nearly twice the rate of the industry and light truck
tyre sales growth was nearly four times industry levels. In addition, original
equipment tyre manufacturers reallocated original equipment production capacity
to the replacement market during the first quarter of 2001 because of slow automotive
production which created excess inventories and additional downward pressure
on sales.
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At Cooper-Standard Automotive, sales were $377 million for the quarter, down
$108 million or 22 percent compared to the first quarter of 2000. $48 million
of this decline was the result of the sale of Holm Industries and the Winnsboro
operations of the Plastics Division during the second quarter of 2000. The decline
in sales of ongoing operations was $60 million or 14 percent and was due to
slowing automobile production in North America.
In addition to lower sales volumes, the company said that operating profits
for the quarter were adversely impacted by higher raw material costs, higher
energy costs and charges for litigation and product liability provisions which
totaled approximately $19 million or 16 cents per share.
Cooper chairman, president and chief executive officer Thomas A. Dattilo said:
"This has been a very difficult quarter, especially in contrast to the record
breaking first quarter of last year. Our team worked extremely hard to make
the most of the difficult conditions in the marketplace and in our industries.
We are by no means pleased by our first quarter results but we continue to execute
our plans and strategy which have been and will continue to be successful for
us.”
"Through the implementation of our strategic plans, Cooper is growing and
we are now among the top 500 companies in the country. We are on track with
our plans to integrate and rationalize our operations. We will be more productive,
more efficient and more competitive in the future as a result,” Dattilo continued.
"In spite of the anomaly that was the first quarter, there are many reasons
to be optimistic as we look to the months ahead. Tire price increases implemented
in North America appear to be holding. During the quarter Cooper-Standard Automotive
won over $80 million in net new business awards that will come on stream in
the next few years. Light vehicle inventory has come down dramatically and should
lead to more stable production patterns during the rest of the year. We anticipate
a much improved selling environment for both sides of our business throughout
the rest of the year and we are well positioned to take advantage of it.”
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