Cooper Tire & Rubber Company (CTB) reported a fall in profit to $32.0 million or 51 cents per share (excluding special items) in the fourth quarter of 2011 from $40.2 million or 64 cents per share in the same quarter of 2010. However, the profit per share surpassed the Zacks Consensus Estimate of 39 cents.
Net sales in the quarter grew 14% to $1.1 billion. Operating profit increased 9% to $59.7 million during the quarter.
Improved price and mix of $128 million more than offset the impact of higher raw material costs by $119 million. Further, $5 million of lower products liability costs, $3 million of lower selling, general and administrative costs, and $2 million of lower other costs favorably impacted the profits during the quarter. However, higher manufacturing costs reduced profits by $15 million, including $11 million of costs related to the labor situation at the company’s manufacturing operations in Findlay, Ohio.
The North American Tire Operations recorded net sales of $777.5 million, up 16% from the fourth quarter of 2010. The higher sales were attributable to both strong price and mix and higher unit sales. The segment’s operating profit was $34.9 million for the fourth quarter or 4.5% of net sales compared with $42.4 million or 6.3% of sales.
The International Tire Operations achieved net sales of $376 million, an increase of 10% from the fourth quarter of 2010 driven by positive price and mix, partially offset by lower volumes. The segment’s operating profit was $28.9 million or 7.7% of net sales compared with $18.5 million or 5.4% of net sales in the fourth quarter of 2010.
For full year 2011, Cooper Tire’s profit per share declined 27% to $1.36 (excluding the impact of valuation allowance) from $1.86 in 2010. However, it was higher than the Zacks Consensus Estimate of $1.24. Net sales escalated 17% to $3.9 billion during the year.
Cooper Tire had cash and cash equivalents of $233.7 million as of December 31, 2011, down from $413.4 million in the corresponding quarter-end a year-ago. Long-term debt stood at $350.7 million as of the above date, translating into a long-term debt-to-capitalization ratio of 33.4%. This compared with $326.6 million or 38.4% as of December 31, 2010.
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), revealed a sharp 71% decline in profit to $6 million or 3 cents per share in the fourth quarter of 2011 from $21 million or 7 cents per share in the same quarter of 2010 (all excluding special items). With this, the company failed to meet the Zacks Consensus Estimate of 26 cents per share during the quarter.
The decline in Goodyear’s profit was primarily attributable to higher raw material costs, lower replacement industry volumes in mature markets along with business challenges in Latin America and flooding in Thailand.
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