Cooper Tire & Rubber earnings drop in first quarter

Cooper Tire & Rubber Company has reported net income of $2 million, or 3 cents per share, for the quarter ended March 31, 2008. Net sales for the period were $679 million, an increase of $10 million over the prior year. The increased revenues were driven by volumes in the International segment.

As with many North American based manufacturing companies, Cooper also faced challenges during the quarter that adversely affected operating results, including increased raw material costs, increased products liability costs and decreased volumes in North America.

Net income for the quarter includes $344,000 of income from discontinued operations net of income taxes compared to $1 million in 2007.

The company repurchased 803,000 shares for $14 million. Debt repurchases during the quarter totaled $14 million.

North American Tire generated sales of $498 million, down 3 percent from 2007's first quarter, and $8 million in operating profit, which was considerably below the first quarter of 2007.

The segment's decrease in sales, compared to the first quarter of 2007, was the result of lower unit volumes partially offset by improved mix. The largest volume decreases were in the areas of economy passenger and light truck tires. While this shortfall was greater than industry declines as reported by the Rubber Manufacturers Association (RMA), a portion of the decline was a result of the company's strategic decisions to eliminate one brand and to exit sales of certain less profitable lines.

Operating profit for North American Tire declined year over year as a result of several key operating factors, according to the company. An improved price to raw material relationship of $7 million compared to the first quarter of 2007 was offset by the decreased volumes, affecting operating profit by $12 million.

Plant operations improved sequentially as the benefits from projects implemented in the second half of 2007 were delivered. Products liability expense for the quarter was $14 million higher, mostly related to revised estimates on existing reserves.

The declining dollar's impact and other factors are driving record-high raw material prices, specifically, in natural rubber and oil-derived materials, the company adds.

The company's International Tire Operations reported sales of $232 million in the quarter, an increase of 27 percent compared with the first quarter of 2007. The segment's operating profit improved by 13 percent to $7 million from the prior year. This increase was driven by higher unit volumes and pricing, offset by increased raw material and advertising costs in China as market development activities continue.