Cooper Tire & Rubber’s (CTB) second-quarter profit fell 31% to miss Wall Street expectations, as the tire maker saw its sales decline while costs increased.
In June, India-based tire company Apollo Tyres agreed to buy Cooper for $2.5 billion. The deal, which is expected to close by the end of this year, would create the seventh-largest tire company worldwide. Cooper will be run by its current management as a privately-held company.
“We are excited about the long-term growth opportunities the pending merger will create,” President and chief executive Roy Armes said in a statement.
Cooper said its second-quarter profit checked in at $35.5 million, below the year-ago period’s $51.7 million. Per-share earnings fell to 55 cents from 82 cents, well below estimates of 95 cents.
Net sales skid 16% to $884.1 million, also missing forecasts for $973.3 million.
Gross margin rose to 17% from 15%.
North American sales, which account for the majority of Cooper’s revenue, were down 19%. International sales dropped 16%.
Lower unit volumes in the latest period lowered Cooper’s profit by $35 million. Selling, general and administrative costs jumped 28% year-over-year, while manufacturing costs climbed $8 million.
“With regard to Cooper’s second quarter results, the period was one of challenge for the economy, the tire industry, and Cooper as we continued to navigate through a tough business environment,” Armes said.
Shares were trading 14 cents lower at $33.75 shortly after the opening bell Thursday. As of Wednesday’s close, the stock had risen about 36% since the deal with Apollo Tyres was announced.