Cooper Tire & Rubber Co. ballooned profit 45 percent last quarter from a year earlier to $59 million, selling more high-profit tires and benefiting from low raw material costs.
Earnings in the January-March quarter translated to $1.05 per diluted share.
Sales declined 2 percent to $650 million, though Cooper sold 2 percent more tires than a year earlier. Goodyear Tire & Rubber Co. sold 2 percent more replacement tires in the quarter.
“Cooper is off to a strong start in 2016,” said Roy Armes, chairman and chief executive officer. “Our first quarter operating margin performance was excellent, and continued the positive results we delivered in 2015.”
Operating margin grew to 14 percent from 10.6 percent a year earlier. In other words, for every dollar in sales, 14 cents became operating profit.
Operating profit grew 29 percent to $91 million.
Raw materials costs declined from a year earlier. Cooper also is benefiting from its introducing and selling more high-profit tires.
“New product introductions and innovation continue to play a significant role in driving growth for Cooper. Cooper is now developing and launching market-leading products at a faster pace than ever before,” Armes said. “Our increased efficiency and speed helps us maximize the return on our (research and development) investment … We continue to shorten our product development cycle time.”
Cooper’s moves to sell more high-value, premium tires reduce its exposure to competition from imports of basic tires.
Cooper’s Americas segment led the company’s strong results last quarter. Operating profit for the segment grew 18 percent to $106 million.
Sales declined 3.3 percent to $579 million. The segment sold 0.5 percent fewer tires than a year earlier. Goodyear Tire’s Americas segment sold 6 percent fewer replacement tires in the quarter.
Cooper’s international operations had a $2 million loss, an improvement from the $3 million loss a year earlier.
Sales for international operations declined 3.7 percent to $103 million. International operations sold 4.6 percent more tires, mainly by increased sales in China of original equipment and replacement tires.
Cooper Tire plans to spend $93 million to buy a 65-percent interest in Chinese tire maker Qingdao Ge Rui Da Rubber Co. (GRT). The purchase, expected to close by September, would increase Cooper’s production of truck and bus tires.
It would fill a gap left in December 2014 when Cooper’s former Chinese partner, Chengshan Group, bought Cooper’s 65 percent ownership in a huge plant for $284.5 million. Cooper and Chengshan had a falling out over the failed attempt by Apollo Tyres of India to buy Cooper in 2013.
The Chengshan factory, which has been renamed Prinx Chengshan (Shandong) Tire Co., was Cooper Tire’s only producer of truck and bus tires.