Cooper Tire & Rubber Q4 Profit Down 73%, But Beats View

(RTTNews) - Cooper Tire & Rubber Co. (CTB) on Friday reported a 73 percent decline in profit for the fourth quarter from last year. The results reflect lower sales, costs related to the company's China joint venture, and costs related to the merger-deal termination with India's Apollo Tyres. However, results for the quarter beat analysts' estimates.

For the fourth quarter, net income attributable to the company was $19.62 million or $0.31 per share, down from $72.94 million or $1.15 per share in the prior-year period.

On average, three analysts polled by Thomson Reuters expected the company to report earnings of $0.26 per share for the quarter. Analysts' estimates typically exclude special items.

The latest quarter's results included $27 million in unusual items related to the negative impacts of labor actions taken at the Cooper Chengshan (Shandong) Tire Co. Ltd. or CCT joint venture. In addition, the results included $9 million of costs resulting from the now-terminated merger agreement with India-based Apollo Tyres.

In June 2013, Cooper agreed to be acquired by Apollo Tyres for $2.5 billion, but in December it terminated the deal due to persistent differences over the offer price.

The matter went to court as Apollo Tyres asked Cooper to reduce the price consideration due to labor issues in the U.S. and problems at its Chinese joint venture. Had the deal closed, it would have created the world's seventh-largest tire company.

Cooper Tire's net sales for the fourth quarter declined 19 percent to $861.01 million from $1.06 billion in the year-ago period. Analysts had a consensus revenue estimate of $774.32 million for the quarter.

North America Tire Operations net sales for the quarter declined 23 percent from last year to $628.08 million, reflecting lower unit volumes as well as unfavorable price and mix. Unit shipments for the North American segment decreased 13 percent.

International Tire Operations net sales decreased 17 percent from the year-ago period to $282.78 million, driven by lower unit volumes as well as unfavorable pricing and mix. These were partly offset by $8 million of favorable currency effects. Sales volumes in Asia decreased 13 percent, while European sales volumes declined 19 percent.

However, Cooper Tire noted that raw material prices for the quarter decreased by 8 percent compared with the year-ago period and 1 percent from the preceding third quarter.

Looking ahead, Roy Armes, Chairman, Chief Executive Officer and President of Cooper Tire, said, "With the merger agreement terminated, operations at CCT returning to normal, and our ERP deployments in the U.S. nearing completion, the challenges of 2013 are largely behind us. Overall, we believe Cooper will begin to recover unit volumes this year and grow volumes at a rate equal to or higher than the industry in key markets."

Cooper Tire expects raw-material prices in the first quarter of 2014 to be about 3 percent lower than the preceding fourth quarter of 2013. The company's long-term raw material outlook is for prices to generally trend higher with periods of volatility.

CTB closed Thursday's regular trading session at $22.82, down $0.27 or 1.17 percent on a volume of 2.21 million shares. In Friday's pre-market, the stock is adding $1.16 or 5.08 percent to $24.00.