Cooper Tyre records decline in Q1 profit.
Cooper Tyre and Rubber reported Q1 2017 net income of $31 million, or $0.57 per share, down from $59 million, or $1.05 per share last year. Q1 net sales for the US-based company were $643 million, a decrease of 1% compared with $650 million in Q1 2016.
Sales were negatively impacted by $11 million of lower unit volume and $9 million of negative foreign currency impact, partially offset by $13 million of favorable price and mix, primarily due to net price increases related to higher raw material costs.
Overall, Cooper’s Q1 unit volume was up 2.9% year over year. Unit volume in the Americas was down 7.4%, driven by a 9.3% drop in North America. The decline was more than offset by strong unit volume performance internationally, which climbed 31.4%. Cooper president and CEO Brad Hughes said: “As anticipated, the first quarter was impacted by a dramatic increase in raw material costs. For Cooper, which is on the LIFO accounting method in the US, increased raw material costs reduced profits by $50 million, which was partially offset by price and mix improvements of $8 million.
In addition, US unit sales volume was down as a result of the timing of price increases and aggressive promotional activity by competitors, as well as overall weaker industry sell-out volumes. We incurred higher manufacturing costs in North America as we managed our inventory levels by reducing production.” The tyre maker reaffirmed full-year 2017 guidance at the 8-10% consolidated operating profit margin range. Capital expenditures for the year are expected to range from $220-250 million.