Paying more for its raw materials and selling fewer tires, Cooper Tire & Rubber Co. saw its profit fall 36 percent last quarter to $45.3 million, the company reported today.
Earnings in the April-to-June quarter amounted to 85 cents per diluted share.
Sales declined 2.6 percent to $720.8 million. Cooper sold 0.5 percent fewer tires.
These are turbulent times for the tire industry with variable raw materials costs, weaker customer demand and competitive pricing and promotions, said Brad Hughes, chief executive officer of Cooper Tire.
Cooper was caught in the turbulence earlier this year year when competitors pulled U.S. customers away by delaying tire price hikes when Cooper rose prices with rising raw materials costs. In the January-March quarter, Cooper sold 11 percent fewer car and light truck tires in the United States than it did a year earlier, while companies belonging to the U.S. Tire Manufacturers Association sold 1.4 percent more tires in the United States.
Cooper’s relative position improved slightly in the April-June quarter. Cooper sold 10 percent fewer car and light truck tires in the United States last quarter. U.S. Tire Manufacturers Association members sold 2.2 percent fewer tires.
“Obviously we are not satisfied with volume decline, but we are pleased that we were able to improve performance for the quarter relative to the industry,” Hughes said.
Higher raw materials costs deflated Cooper Tire’s operating profit by nearly 32 percent to $74.8 million.
Operating profit for Cooper’s Americas Tire segment fell 28 percent to $83.3 million.
Sales decreased 6 percent to $615.4 million for the segment. The Americas segment sold 4.4 percent fewer tires. It posted a modest increase in number of tires sold in Latin America, but that was more than offset by the decrease in North America.
Lower sales volumes in the United States prompted Cooper to reduce production.
In its overseas operations, Cooper’s operating profit fell nearly 60 percent to $1.3 million.
Sales increased 22 percent to $151.4 million. Its international operations sold 11 percent more tires, with an increase in Asia offsetting a decrease in Europe.