Cooper Tire and Rubber Co. posted first-quarter earnings Friday that were haunted by a ghost whose initials are CCT.
The Findlay-based tire manufacturer’s net profits were down nearly 10 % and its revenues down 20 % largely due to the absence of Cooper Chengshan Tire Co. (CCT), the company’s former joint venture operation in Rongcheng, China, which proved to be both a financial boon and corporate headache.
Cooper finalized the sale of its 65 % stake in CCT, which added a projected US$157 million to net sales in December following labor and management issues at the plant in 2013 that helped kill a planned merger between Cooper Tire and India’s Apollo Tyres Ltd.
With CCT no longer there to help Cooper’s bottom line, the company on Friday reported a first-quarter profit of US$41 million, or 69 cents a share, down from US$45 million, or 71 cents a share, a year ago. Sales revenues totaled US$663 million, down from US$796 million a year ago.
Excluding CCT, first-quarter 2014 sales actually rose 4 % on higher volume of US$35 million, pleasing Cooper executives.
“Our first-quarter performance continued the positive trends we saw last year. The Americas segment posted outstanding results, with solid unit volume growth and an operating margin of 15 %, well above our target,” said Roy Armes, Cooper’s chairman, president, and chief executive officer. “With the strong Americas performance, we came close to last year’s earnings per share despite the absence of CCT in the quarter,” Mr. Armes added.
Cooper’s first-quarter operating profit was US$70 million. That compared with US$81 million a year ago, which included US$21 million from CCT.
International tire operations sales fell to US$107 million, compared to US$310 million in 2014. The decrease reflected a drop of US$185 million due to the absence of CCT.
Cooper Chengshan ended up being the roadblock in the Findlay company’s US$2.5 billion merger attempt with Apollo in 2013.
Shortly after the merger was announced in June, 2013, both workers and management at CCT objected to the merger. Workers went on strike and cut production. Then management at CCT refused to provide Cooper with vital financial information needed to complete the merger and issue its third-quarter, 2013 earnings statement.
Without the financial data, Cooper could not secure financing, leading to the merger’s collapse.
The Findlay tire maker eventually soured on the joint venture and in 2014 offered its joint venture partner, Chengshan Group Co. Ltd., the option to buy Cooper Tire out. Chengshan paid US$262 million for the 65 % interest with the sale finalized in early December. – Toledoblade.com