Cooper Tire & Rubber Company Reports Second Quarter Results FINDLAY, Ohio, August 8, 2013 – Cooper Tire & Rubber Company (NYSE: CTB) today reported results for the second quarter of 2013. Net sales were $884 million, a decrease of $174 million compared with the same period a year ago. Operating profit for the second quarter was $69 million, which is $26 million lower than the same period in 2012 and 7.8% of net sales. The company reported net income attributable to Cooper Tire & Rubber Company of $35 million, or $0.55 per share, in the second quarter. This compares with $52 million, or $0.82 per share, for the same period last year. For the first six months of 2013, operating profit was $166 million compared with $143 million for the same period in 2012. On June 12, 2013, the company announced it had reached a definitive merger agreement under which a wholly-owned subsidiary of Apollo Tyres, Ltd. will acquire Cooper in an all-cash transaction valued at approximately $2.5 billion. The transaction, which will bring together two companies with highly complementary brands, geographic presence, and technological expertise, is expected to close before the end of this year. Cooper’s second quarter operating profit comparison was impacted by several one-time items unique to the period in both 2012 and 2013. In the second quarter of 2012, operating profit included a pre-tax gain of $7 million related to the curtailment of a pension plan within the company’s United Kingdom operations, which was partially offset by $2 million in start-up costs for the company’s new manufacturing operation in Serbia. In the second quarter of 2013, results included $7 million in higher costs related to the pending merger with Apollo Tyres, Ltd. The $7 million included increased accruals for stock-based liabilities of $3 million, reflecting the stock price appreciation following the acquisition announcement, and transaction related expenses of $4 million. These non-recurring items account for $12 million of the year-over-year decline in second quarter operating profit. In addition to the one-time items, the company’s second quarter 2013 operating profit reflected $120 million from lower raw materials costs, which was partially offset by reduced pricing and unfavorable mix of $81 million. Lower unit volumes decreased profit by $35 million. Selling, general and administrative costs for the period were $10 million higher than second quarter 2012, excluding the merger related costs referenced above. The higher costs included professional fees related to the company’s ERP implementation and continued investments in brand building initiatives and increasing tire distribution capability, primarily in China. Manufacturing costs in the second quarter of 2013 were $8 million higher than second quarter 2012, driven entirely by $10 million of cost from production curtailments implemented to adjust inventory levels. Products liability expenses in the second quarter of 2013 were $5 million lower than the same period a year ago. All other changes were $5 million unfavorable during the quarter, primarily due to higher freight and logistics costs related to managing higher inventories. For the first six months of 2013, operating profit was $166 million compared with $143 million for the same period in 2012. Results for the first half of 2012 also included several one-time items: incremental costs of $29 million related to labor issues at the company’s Findlay facility, the pension curtailment gain of $7 million referenced above, and $4 million in start-up costs at the company’s Serbia facility, which, in combination, resulted in a net negative impact of $26 million. Results for the first half of 2013 included $7 million of incremental costs related to the announced merger with Apollo Tyres, Ltd. Excluding these non-recurring items from both periods, operating profit was $4 million higher year-to-date in 2013 than the same period a year ago. “Clearly, the big news in the second quarter was the pending merger with Apollo, a transaction that, subject to customary closing conditions, will create a combined company with approximately $6.6 billion in total sales and a strong presence in high-growth end-markets across four continents,” said Cooper Chairman, Chief Executive Officer and President Roy Armes. “We are excited about the long-term growth opportunities the pending merger will create and expect it to close before the end of this year. With regard to Cooper’s second quarter results, the period was one of challenge for the economy, the tire industry, and Cooper as we continued to navigate through a tough business environment. We are pleased with the initial reaction to the pricing changes we made toward the end of the quarter, but more remains to be seen as we enter the third quarter. While the second quarter was challenging, we are pleased to have ended the first half of 2013 with operating profit that is $4 million higher than the same time last year, excluding one-time items. Cooper has once again demonstrated an ability to deliver bottom line results across varied industry conditions.” -moreNEWS
Posted on: Mon, 12 Aug 2013 07:08:51 +0000
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