FINDLAY — Cooper Tire & Rubber Co. has finally closed the book on 2013, a year its top executive characterized as full of “unique challenges and unprecedented circumstances.”
That might be an understatement.
Cooper came into 2013 strong. It was coming off a record year for sales and in June announced a big merger agreement with Apollo Tyres Ltd. that promised to make shareholders a tidy profit and create the world’s seventh-largest tire maker.
But the deal soon unraveled, ultimately costing Cooper $74 million.
In spite of that, the company still managed to turn in a profitable year and beat analysts’ expectations for the fourth quarter.
Cooper said Friday its fourth-quarter sales were $861 million, down 19 percent from the previous year. Profits fell even more, tumbling 73 percent to $19.6 million, or 31 cents per share.
Still, that was more than the 26 cents per share analysts had predicted. The better-than-expected results helped push shares of Cooper’s stock up almost 7 percent to $24.36.
For the full year, Cooper reported profits of $111 million, or $1.75 per share, on sales of $3.4 billion. In 2012, Cooper earned $220 million, or $3.52 per share, on sales of $4.2 billion.
During a conference call with investors and analysts, CEO Roy Armes said 2013 was a trying year, but one that proved the resilience of Cooper’s business model.
“Even with all that took place, we’ve remained a strong company that is proud to mark its 100th anniversary in the tire business this year,” he said.
One of Cooper’s biggest challenges in 2013 was a work stoppage at its joint-venture plant in China. In protest of the merger, employees there shut down the plant from mid-July to mid-August.
When they returned, they refused to make any Cooper-brand tires, and Cooper was unable to get financial records from the plant. The issues weren’t completely sorted out until earlier this year.
Company officials said Friday that U.S. shipments of its Roadmaster brand medium truck tires were down 87 percent in the fourth quarter and nearly 50 percent for the year because of the production stoppage in China.
Cooper manufactures its Roadmaster tires in China and imports them to the United States.
In all, the actions at the Chinese plant cost Cooper a total of $56 million for the year, and delayed reporting of the company’s third-quarter and full-year financials.
The company also counted $18 million of expenses directly related to the aborted merger agreement, bringing the total cost of the failed endeavor to $74 million.
Also hurting Cooper in the fourth quarter were problems with a new software system that officials say should eventually save the company money.
“As we deployed, we had issues with warehousing and shipping that made us less efficient when moving tires from our plants to our warehouses and then to our customers,” Mr. Armes said.
The company says the situation is improving as employees continue to be trained on the new system. Looking ahead to 2014, company officials are optimistic the company is headed toward better times. Mr. Armes said Cooper has largely moved past the challenges of 2013, and expects to begin recovering unit volumes and grow at a rate equal to or better than the industry.
“We indeed are moving this business forward,” Mr. Armes said.