3RD-QUARTER REPORT

Cooper Tire blames failed merger for $168,000 loss

3/1/2014

FINDLAY — Owing to difficulties obtaining financial information from its joint venture in China, Cooper Tire & Rubber Co. finally reported its third-quarter earnings on Friday. The report was dismal, largely because of Cooper's aborted merger with Apollo Tyres Ltd. of India and a work stoppage at the joint venture that played a key role in the cancellation of the Apollo deal.

Cooper announced the end of the merger attempt in late December.

The Findlay-based tire manufacturer reported a third-quarter loss of $168,000, on revenues of $832.4 million.

In the third quarter of 2012, it posted a profit of $74.1 million, or $1.17 a share, on revenues of $1.1 billion.

The quarterly earnings are nearly four months late because the firm has been unable to obtain financial data from the Chinese operation, Cooper Chengshan Tire Co. (CCT) in Rongcheng, China, a sticking point that helped foul up the merger.

“With the merger agreement terminated and operations returning to normal at CCT, we are resuming financial reporting and moving our business forward,” Cooper Chairman, Chief Executive Officer, and President Roy Armes said in a statement Friday.

“As expected, issues surrounding the merger had a significant negative impact on our third-quarter results, and we anticipate some carryover of these negative impacts to a lesser degree in the near term,” he said.

“Still, our business model remains resilient, and we will report positive operating profit and net income for the fourth quarter and second half of 2013. We will also end the year with a strong balance sheet, which is important as we continue to invest in our business and focus on delivering value to stockholders.”

Cooper said a work stoppage at CCT that started last July reduced the company’s third-quarter operating profit by $29 million. Cooper also was hit with a $5 million expense in the quarter associated with the merger attempt.

The company got a $36 million boost in the quarter from lower material costs, but that positive lift was more than offset by unfavorable pricing and product mix of $76 million.