Cooper Tire & Rubber Co.
) posted earnings of 55 cents per share in the second quarter of
2013, down 33% from 82 cents in the prior-year quarter. The
results lagged the Zacks Consensus Estimate of 89 cents by a
substantial margin. Net earnings also declined significantly to
$35 million from $52 million in the second quarter of 2012.
Revenues of Cooper Tire fell 16.5% year over year to $884
million in the quarter, missing the Zacks Consensus Estimate of
Operating profit declined to $69 million (7.8% of sales) from
$95 million (9%) a year ago. Operating profit in the quarter
includes costs of $7 million related to the imminent $2.5 billion
merger with Apollo Tyres Ltd. Operating profit in the year-ago
quarter included pre-tax gains of $7 million due to the curbing
of certain pension plans in Cooper Tire's operations in the U.K.,
partly offset by start-up costs of $2 million related to the new
manufacturing operations in Serbia.
Operating profit in the quarter was positively affected by
lower material costs of $120 million. This was partially offset
by $81 million in unfavorable price and mix, $10 million in
higher selling, general and administrative expenses, $8 million
in higher manufacturing costs of and $35 million in lower
The North American Tire Operations recorded a 19% decline in
revenues to $623.2 million. Operating profit in the segment
declined to $59.2 million (9.5% of net sales) from $65 million
(8.4%) in the second quarter of 2012.
The International Tire Operations posted a 15.6% decline in
revenues to $353.3 million. Operating profit fell 32.4% to $29.2
million (8.3% of net sales) from $43.2 million (10.3%) a year
Cooper Tire had cash and cash equivalents of $244.2 million as
of Jun 30, 2013, up from $240.5 million in the corresponding
year-ago quarter-end. Long-term debt stood at $326.9 million as
of Jun 30, 2013, translating into a long-term
debt-to-capitalization ratio of 32.2%. This compares with $337.1
million or 42.9% as of Jun 30, 2012.
Cooper Tire expects raw material cost to decline sequentially
by 4% in the third quarter of 2013. For 2013, capital
expenditures are expected between $190 million and $210
Cooper Tire & Rubber Company, a Zacks Rank #4 (Sell)
stock, believes that an altered business model and efficient
execution of the business plan should help the company improve
results despite expected volatility in raw material pricing,
weakness in tire demand and weak international macro economic
conditions. Additionally, the company is expected to witness a
surge in growth opportunities following the completion of the
merger with Apollo Tyres.
Stocks that are performing well in the broader industry where
Cooper Tire operates include
Goodyear Tire & Rubber Company
). Goodyear carries a Zacks Rank #1 (Strong Buy) while
Continental and Visteon hold a Zacks Rank #2 (Buy).
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