winter

AKRON/FINDLAY, Ohio — Direct customers and consumers alike should reap the benefits of a combined Goodyear-Cooper Tire & Rubber Co. entity, according to the executives who helped orchestrate the $2.5 billion transaction. Once Goodyear completes its integration of Cooper — the proposed megasale was announced before the start of business on Feb. 22, pending regulatory approval — the new company promises to offer a broader portfolio, improved service and delivery and more opportunity than ever before, according to Richard Kramer, CEO and president of Goodyear. The move combines two Ohio-based companies that have been making tires for more than a century. Speaking to members of the tire trade press Monday afternoon, Mr. Kramer said the transaction is good news for independent tire dealers across North America. "By being able to put our networks together, our products together, our offerings together, our services together, our OE pull that can come into those dealers along with a wide array of products there, I think that that service proposition actually gets better for them going forward because of the combination of these two companies," Mr. Kramer said. "Dealers should feel good about it, and supply and service ought to be something that improves." Cooper Present and CEO Bradley Hughes said he understands the uncertainty that comes with a transaction of this magnitude — Goodyear ranks third in global tire sales, based on 2019 figures, while Cooper sits at No. 13 — but the opportunities far exceed the risk. "I'd look heavily on the product side," Mr. Hughes said. "Forget about brand at this point. You think about the resources that are available to both companies to develop tires and to make sure we're bring those to market very competitively, at a good pace, so there's fresh products out there all the time. I think this offers opportunity." An integral part of that opportunity lies in an expanded Goodyear product portfolio, according to Mr. Kramer. Goodyear will maintain its strategy of a Goodyear premium brand, bolstered by complementary Goodyear brands (Kelly, Dunlop) and Cooper brands (Cooper, Mastercraft and Mickey Thompson). "As we think about what's happening in the tire industry, the competition out there, there is a benefit to having a combined portfolio of all these complementary brands to take care of customers in each of these market segments," Mr. Kramer said. "We don't view these as necessarily replacing each other, but rather being complementary and offering that enhanced value proposition to our customers and consumers," he said. "When we think about the Cooper brand, particularly Mastercraft in the light truck and SUV markets, the company has done a wonderful job of shifting up those premium products and being able to produce those. So that market position as a combined company is one we're going to take advantage of." Mr. Kramer noted the Cooper portfolio enhances depth in the "highly profitable" light truck and SUV market. "From our perspective it gives us a stronger financial foundation, with greater resources, an improved balance sheet," Mr. Kramer said. "It gives an opportunity to grow, and it gives us increased opportunities all around as a company to think about investing more into the future." According to Mr. Kramer, the combined company will account for: $17.5 billion in revenue; and 200 million units produced yearly, including 64 million in the U.S. Goodyear said combining Cooper's activities with its own should yield $165 million in savings through synergies over a two-year period. Those saving synergies will be realized in selling, general and administrative expenses; research and development; distribution and warehousing; and procurement. Potential synergies in leveraging the respective manufacturing assets are still to be determined; Goodyear said no plant closings or personnel layoffs are expected. At the same time, Goodyear said it expects to book expenses of $150 million to $175 million in order to achieve the referenced synergies. Still to be determined is how the integration of the wholesale business, particularly the role that TireHub — the combined 50-50 joint venture wholesaler owned by Goodyear and Bridgestone Corp. — will play in the bigger company. Mr. Kramer said a key element of his company's acquisition of Cooper's 10 tire plants worldwide is Cooper's assets in China, which would nearly double Goodyear's presence there, opening more opportunity for OEM business. "Between the U.S. and China, that's where the growth and the lion's share of the global tire industry sits," Mr. Kramer said. "Clearly, a real benefit for us going forward." Both executives said the integration should be easier since the companies have similar cultures. "We believe it's a natural fit between (Akron-based) Goodyear and (Findlay-based) Cooper, a cultural fit," Mr. Kramer said. "We believe that being two Ohio based 100-year plus companies that this is an organization that shares the same values. That's important for a lot of reasons. It really improves the integration opportunity going forward because we know integration is key to making sure we get the value from the deal we have here." […]

FINDLAY, Ohio — Cooper Tire & Rubber Co. swam against the current last year, reporting 32.8% higher operating earnings for the year ended Dec. 31.Cooper's earnings improvement came despite 8.4% lower sales. Cooper cited measurable bottom-line increases in raw materials purchases and the price/mix component for the overall improvement in operating income. Offsetting these improvements were the negative impacts of lower sales volumes and reduced manufacturing output. Operating income improved to $230.9 million on sales revenue of $728.3 million, raising the operating ratio three full points to 9.3%. Net income fell 28.6% to $37.7 million, or 75 cents per share. Global unit volume fell 13% versus 2019, Cooper said. "In 2020, Cooper continued to build upon the positive momentum that began in 2019, driven by execution of our strategic initiatives, which have successfully transformed Cooper into a consumer-driven company," Cooper President and CEO Brad Hughes said. "Despite impacts from coronavirus, we delivered strong operating profit performance for the year and demonstrated that the value proposition of providing high-quality tires at an affordable price is compelling for consumers, especially in the current environment."Business in the Americas fell 7.8% for the year to $2.17 billion, Cooper said, but operating profit jumped 17.8% to $280.3 million, or a ratio of 12.9%In the quarter ended Dec. 31, Cooper's operating profit slipped 5.2% to $60.3 million, on 2.9% lower sales of $728.3 million. Fourth quarter net sales were negatively impacted by $74 million of lower unit volume, partially offset by $48 million of favorable price and mix and $4 million of favorable foreign currency impact, Cooper said. Operating profit included $22 million of unfavorable raw material costs, which were offset by $22 million of favorable price and mix, $7 million of lower manufacturing costs and $3 million of lower product liability expense. These were more than offset by $12 million of lower unit volume and $2 million of higher selling, general and administrative (SG&A) expenses.Fourth quarter sales in the Americas segment fell 3.9% on lower unit volume and an unfavorable foreign currency impact, which were offset partially by $58 million of favorable price and mix. For the quarter, segment unit volume was down 12.5% versus the 2019 quarter. Cooper said its light vehicle tire shipments in the U.S. in the quarter dropped 10.9%, and thus the company lost market share versus the industry as industrywide shipments fell just 0.5%, according to U.S. Tire Manufacturers Association data. Cooper did not issue a fiscal 2021 forecast owing the pending agreement to sell to Goodyear. […]