Cooper Tire steers back to profitability

FINDLAY - A year after seeing its entire industry careening toward an economic crash, Findlay-based Cooper Tire & Rubber Co. yesterday reported that its company had corrected and was safely back on the profit highway.

The replacement-tire manufacturer yesterday reported a 2009 profit of $83.6 million, or 85 cents a share, an improvement from the $227.4 million, or $3.72 a share, loss for 2008. It had sales last year of $2.8 billion, down 4 percent from 2008.

For the fourth quarter, the company said it had a profit of $55.8 million, or 63 cents a share, a turnaround from the loss of $154.5 million, or $2.44 a share, for the same period a year earlier. Its sales for the quarter were $773.1 million, up 22 percent from a year earlier.

"Demand for replacement tires seems to be in better shape than it was a year ago," Roy Armes, Cooper's chairman and chief executive officer, told analysts yesterday.

Mr. Armes and other company officials reported that efforts to increase production at its plant in Texarkana, Ark., are moving forward and that the company is increasing production at its other North American facilities as well. The production increases came after the company closed its plant in Albany, Ga., in September, while winning state and worker concessions to help its bottom line at plants in Findlay, Texarkana, and Tupelo, Miss.

"As demand increased [in the second half of 2009], we operated at a level close to full manufacturing capacity," Mr. Armes said.

Two outside factors are affecting profitability, however. In September, the United States - which is Cooper Tire's largest market - imposed a tariff on tires manufactured in China and imported to the United States. The company makes some entry-level tires in China.

In addition, the cost of the raw materials in its tires has steadily increased, squeezing profitability. Cooper Tire was able to pass on a 7 percent increase in the cost of its tires in January, however, executives said.

Tire industry analyst Saul Ludwig, of KeyBanc Capital Markets, asked executives of the Fortune 500 firm whether the industry "needs to move prices again" because of increasing raw materials costs.

But Mr. Armes said his company and other tire manufacturers won't be able to keep up with rising rubber prices. "Materials costs are going up at a rate that we don't have any other way to offset that," he said.

Contact Larry Vellequette at:

lvellequette@theblade.com

or 419-724-6091.