Cooper Tire Misses Expectations - Analyst Blog

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Cooper Tire & Rubber Company ( CTB ) reported a 37.5% rise in profits to $22.0 million or 34 cents per share in the first quarter of 2012 from $16 million or 25 cents in the corresponding quarter of 2011. With this, profits surpassed the Zacks Consensus Estimate by 2 cents per share.

Revenues in the quarter hiked 9% to $984 million from $902 million in the same quarter prior year. The increase in revenues was attributable to improvements in prices while volumes declined slightly during the quarter. Revenues were lower than the Zacks Consensus Estimate of $1,016 million.

Improved price and mix of $71 million offset the impact of higher raw material costs of $8 million. Selling, general and administrative expenses went up $9 million to $58 million in order to expand the company's distribution network and promote its brands. Costs related with the startup of operations in Siberia were $3 million.

Higher manufacturing costs, including $29 million of costs related to the labor situation at the company's manufacturing operations in Findlay, Ohio, reduced profits by $31 million. Further, the company expects costs (measured by the raw material index) to increase between 5% and 7% in the second quarter of the year.

Revenues from the North American Tire Operations swelled 8% to $698 million from $644 million in the same quarter last year. The higher sales were attributable to strong price and mix, which was partially offset by decline in unit sales by 3%.  The segment operating profit was $23 million or 3.37% of sales compared to $21.5 million or 3.34% of sales in the first quarter of 2011.

Revenues from the International Tire Operations were $404 million, up 11% from $363 million in the first quarter of last year. The increased was favorably impacted by better price and mix and an 8% increase in sales volume. The segment operating profit was $33 million or 8.1% of net sales compared with $20 million or 5.5% of net sales in the first quarter of 2011.

Cooper Tire had cash and cash equivalents of $258 million as of March 31, 2012, up from $188.5 million as of March 31, 2011. Long-term debt was $335 million as of March 31, 2012 compared with $317 million as of March 31. 2011.

Capital expenditures were $37 million compared to $36 million in the corresponding quarter of 2011. In the first quarter of 2012, the company has invested $19 million for assets to be used by its Krusevac unit in Siberia. For 2012, it expects capital expenditures in the range of $180 million to $210 million.

Cooper Tire & Rubber Company, a Zacks #3 Rank (Hold) stock, believes stabilizing raw material costs, flexible manufacturing operations, profitable investments, and competitive labor agreements will help the company improve results despite headwinds facing the industry.

Cooper Tire's competitor Goodyear Tire & Rubber Company ( GT ) reported a 34% decline in profits to $84 million or 34 cents per share in the first quarter of 2012 from $127 million or 51 cents in the same quarter of 2011 (all excluding special items). However, profits were significantly higher than the Zacks Consensus Estimate of 8 cents per share during the quarter.


 
COOPER TIRE (CTB): Free Stock Analysis Report
 
GOODYEAR TIRE (GT): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CTB , GT

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