COOPER TIRE Q1 PROFIT PLUNGES

Time: May 1st 2017   Copy editor: Tyrefull

A dramatic increase in raw material costs and fall in sales volume pulled down net profit of Cooper Tire for the first quarter of 2017.

Net profit was down by 48% to $31 million for the  first quarter of 2017. Net sales decreased 1% to $643 million.

“As anticipated, the first quarter was impacted by a dramatic increase in raw material costs.  For Cooper, which is on the LIFO accounting method in the U.S., increased raw material costs reduced profits by $50 million, which was partially offset by price and mix improvements of $8 million.  In addition, U.S. unit sales volume was down as a result of the timing of price increases and aggressive promotional activity by competitors, as well as overall weaker industry sell-out volumes.  We incurred higher manufacturing costs in North America as we managed our inventory levels by reducing production.  On the positive side, our U.S. TBR volume was up 32 %, Latin America region unit volume was up nearly 16 %, and International segment volume was up 31 %.  Combined, global unit volume increased nearly 3 % year over year, and we generated a 16.6 % return on invested capital for the trailing four quarters. We believe Cooper is well positioned as we head into the remainder of 2017,” said Cooper President & Chief Executive Officer Brad Hughes.

“Going into the second quarter, our inventory levels are in good shape and raw material costs have begun to level off.  We expect pricing to continue to adjust to the new raw material cost environment and promotional activity to continue.  Our U.S. unit volume should improve relative to the industry and we anticipate that our March price increases will deliver more benefit with a full quarter’s impact.

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