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Cooper Tire & Rubber Company has a market cap of $1.09 billion; its shares were traded at around $18.88 with a P/E ratio of 13.3 and P/S ratio of 0.3. The dividend yield of Cooper Tire & Rubber Company stocks is 2.4%.
Highlight of Business Operations:Operating profit in the first six months of 2012 increased $87 million from the first six months of 2011. Favorable pricing and mix ($69 million), lower raw material costs ($59 million) and increased unit volumes ($18 million) contributed to the higher operating profit for the first six months of 2012. Increased selling, general and administrative costs ($28 million) and higher products liability charges ($1 million) reduced the Company’s operating profit. Additionally, the Company experienced decreased manufacturing efficiencies ($23 million) for the six-month period ended June 30, 2012, which includes $29 million of first quarter costs related to the labor issues at the Findlay, Ohio manufacturing facility. Other operating costs were unfavorable ($14 million) as the result of increased pension and incentive compensation expense, in addition to start-up costs related to the Company’s operations in Serbia. The International Tire Operations segment had a $7 million pension curtailment gain in the second quarter.
For the quarter ended June 30, 2012, the Company recorded income tax expense of $29.3 million (effective rate of 33.3 percent) as compared to $1.6 million (effective rate of 17.8 percent) for the comparable period in 2011. For the six-month period ended June 30, 2012, the Company recorded income tax expense of $41.6 million (effective rate of 32.4 percent) as compared to $12.1 million (effective rate of 23.7 percent) for the comparable period in 2011. The 2012 quarter and six-month period income tax expense is calculated using the forecasted multi-jurisdictional annual effective tax rates to determine a blended annual effective tax rate. This is impacted by the projected mix of earnings in international jurisdictions with lower tax rates, partially offset by losses in jurisdictions with no tax benefit due to valuation allowances. The effective income tax rate for the quarter ended June 30, 2011 differs from the current quarter due to the U.S. valuation allowance that was released at December 31, 2011, and certain PRC tax holidays in effect at that time. In addition the current quarter and six-month period income tax expense is higher primarily due to increased pretax earnings. Discrete tax items were not material for the current quarter and six-month period. For the quarter and six-month period ended June 30, 2011, income tax expense included a discrete tax benefit of $1.2 million and a discrete tax expense of $1.4 million, respectively.
North American Tire segment operating profit increased $61 million in the second quarter of 2012 compared to the second quarter of 2011. Operating profit increased as a result of lower raw material costs ($35 million), favorable pricing and mix ($18 million), increased unit volumes ($12 million), improved manufacturing efficiencies ($7 million) and decreased products liability charges ($1 million). Selling, general and administrative charges, including increased incentive based compensation, were unfavorable ($5 million). Additionally, other operating costs were unfavorable ($6 million) as a result of increased pension and incentive compensation expense.
Operating profit for the segment increased $63 million in the first six months of 2012 from the first six months of 2011. The increase in operating profit was driven by favorable price and mix ($75 million), lower raw material costs ($17 million) and increased unit volumes ($9 million). The segment experienced decreased manufacturing efficiencies ($21 million) for the six-month period ended June 30, 2012, which includes $29 million of first quarter costs related to the labor issues at the Findlay, Ohio manufacturing facility. Selling, general and administrative charges, including increased incentive based compensation and higher advertising spending, were unfavorable ($8 million) and products liability charges increased $1 million. Additionally, other operating costs were unfavorable ($9 million) as a result of increased pension and incentive compensation expense.
Operating profit for the segment in the first six months of 2012 was $33 million higher than the same period for 2011. The increase in operating profit was due to lower raw material costs ($62 million) and increased unit volumes ($9 million). These improvements were partially offset by unfavorable pricing and mix ($26 million) and decreased manufacturing efficiencies ($2 million). Selling, general and administrative charges were higher ($13 million) as a result of higher selling costs associated with increased sales levels, higher advertising spend and additional investments in the distribution network in the Chinese market. Start-up costs related to the Company’s operations in Serbia ($4 million) and other costs ($1 million) were unfavorable compared with the same period in 2011. The segment had a $7 million pension curtailment gain in the second quarter.
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