Cooper Tire Profits Dip 18% - Analyst Blog

Cooper Tire & Rubber Company (CTB) showed an 18% fall in profit to $49.4 million in the third quarter of 2010 from $60.2 million in the same quarter of prior year (all excluding the restructuring charges related to the closure of the Albany, Georgia facility).

On earnings per share basis, profits declined 20% to 79 cents from 99 cents in the third quarter of 2009. The lower profit was attributable to higher raw material prices, reflecting a 14% rise in cost of sales to $754.7 million. Despite all this, it exceeded the Zacks Consensus Estimate of 62 cents per share.

Sales in the quarter grew 10% to $883 million. Operating profit reduced to $67.1 million from $70.7 million in the year-ago quarter due to the above-explained factor.

The North American Tire Operations generated sales of $647.8 million that exceeded the year-ago level by 13% due to favorable price/product mix. The light vehicle tire shipments in the segment slipped 1.8%, outperforming the fall in total industry shipment of 2.7%. Operating profit decreased to $55 million (8.5% of sales) from $47.6 million (8.3%) in the comparable quarter of 2009.

The International Tire Operations reported sales of $325.2 million in the quarter, up 10% compared with the third quarter of 2009 due to better price/product mix, offset partially by lower volumes. Sales volumes in the Asian operations rose 2.5% (including inter-company shipments), while the same in the European operations fell 5.1% from the year-ago level. Operating profit dipped $9.4 million or 31% to $20.5 million from $29.9 million in the previous year.

Cooper Tire had cash and cash equivalents of $347.4 million as of September 30, 2010, down from $409.5 million as of the corresponding quarter-end a year-ago. Long-term debt amounted to $330.8 million as of the above date. The long-term debt-to-capitalization ratio stood at 39%, down significantly from 54% as of September 30, 2009.

Cooper Tire & Rubber Company, a Zacks #2 Rank (Buy) stock, expects to enhance its production volume by 10% in 2011 compared with 2010. The company has raised prices across the world as it anticipates raw material costs to further increase in the near-term.