Cooper Tire (CTB 29.90, +2.05, +7.36%) spiked downward in
early trade after reporting quarterly results.
The tiremaker reported above-consensus second quarter earnings of $0.30 per share on a 3.2% year/year decline in revenue to $698 mln, which was better than expected. However, the better than expected results were offset by reduced guidance.
Going forward, the company expects that unit volume will be unchanged year/year during the current fiscal year while operating margin is expected to improve slightly when compared to the first half of the fiscal year. Operating profit is expected to grow between 10.0% and 14.0%.
Returning to second quarter results, consolidated unit volume fell 2.1% year/year due to weakness in the Americas segment, which was partially offset by international growth. Operating margin declined to 4.7% from 11.7% due to higher manufacturing costs and lower volume. The company's raw material index increased 4.6% quarter/quarter.
Looking at the segment breakdown, sales in the Americas declined 5.0% to $584 mln due to a 3.7% year/year decline in unit volume and unfavorable price/mix. Total light vehicle tire shipments in the U.S. declined 3.3%, outpacing the 0.6% decline in total shipments of light vehicle tires in the U.S. reported by the U.S. Tire Manufacturers Association. Segment operating profit fell 55.5% to $40 mln while operating margin declined to 6.9% from 14.8%. The declines were driven by unfavorable price/mix, higher raw material costs, and higher manufacturing costs.
International net sales grew 10.9% year/year to $168 mln with unit volume increasing 0.7% year/year. The growth was driven by volume increases in Asia while unit volume in Europe declined slightly. Segment operating profit grew 110.1% to $6 mln while operating margin improved to 3.4% from 1.8%.
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