Aug. 3 (Bloomberg) -- Cooper Tire & Rubber Co. Chief Executive Officer Thomas Dattilo resigned as weak demand in North America resulted in a fifth-consecutive quarterly loss. The company's shares dropped 8.1 percent, the most in a year.

Dattilo, 55, is leaving to pursue other interests, the company said today, without providing more detail. The second- quarter loss was $20.7 million, or 34 cents a share, compared with a deficit of $6.88 million, or 11 cents, a year earlier.

``The company's performance has been poor for some time,'' said Standard & Poor's analyst Martin King. ``The second quarter is evidence that this is going to be another tough year.''

Declining tire sales in North America forced a production cut in the second quarter to reduce inventories. The company is trying to sell more high-priced performance and specialty tires to offset the lower demand, which it expects to ``improve somewhat'' in 2006's second half.

Cooper's shares fell 81 cents, or 8.1 percent, to $9.19 at 4:17 p.m. in New York Stock Exchange composite trading. It was their biggest one-day drop since Aug. 2, 2005. The stock has declined 40 percent this year.

Dattilo had been at Findlay, Ohio-based Cooper's helm since 2000, overseeing four-straight annual profits before a $9.36 million loss last year. During the past 18 months, Cooper has faced a worker strike, declining tire sales in the U.S. and higher costs for commodities such as rubber.

Raw-Materials Cost

Dattilo has left the company and wasn't available for comment, spokeswoman Pat Brown said today. Before becoming chief executive, Dattilo was Cooper's chief operating officer for a year, and from 1977 to 1999 worked at auto-parts maker Dana Corp.

More expensive raw materials damped operating profit by $27 million in the second quarter. Sales rose 22 percent to $624.8 million, boosted by the acquisition of a Chinese tiremaker.

JP Morgan Securities Inc. analyst Himanshu Patel said in a note to clients that the chief executive's departure may signal a shift in the company's strategy, and Cooper may be an acquisition target for either a non-U.S. tiremaker or a private-equity firm.

There are no plans to sell the company, Cooper's interim chief, Byron O. Pond, said on a conference call today. Finance chief Phil Weaver added that there also are no plans to take the company private.

Pond is a member of the company's board and will serve as chief until a successor can be found. Fellow board member John Holland will lead a committee searching for a replacement candidate, the company said. Spencer Stuart, a recruiting firm, will assist in the search.

`Road to Profitability'

``We have a game plan for moving forward and getting the company back on the road to profitability,'' Pond told analysts during the conference call.

The outlook for Cooper's credit quality reached its lowest point in at least three years today. The annual cost to protect $10 million of its debt for five years using credit-default swaps rose to as much as $530,000 from $457,000 yesterday, according to data compiled by Bloomberg. The cost is the highest since at least 2003, when Bloomberg started tracking the company's swaps.

The average price for protection is almost three times than that of other members in a Dow Jones derivatives index of companies with low investment-grade and high junk-bond ratings.

Demand for light-vehicle replacement tires in North America declined 7 percent industrywide in the second quarter, and 5 percent at Cooper. Sales of Cooper's less expensive brands, often sold at discount stores, had a bigger drop as higher gasoline prices reduced consumers' disposable income.

International Sales

Sales outside of North America more than doubled in the second quarter, to $185.9 million, boosted by the acquisition of a 51 percent stake in China's Chengshan Tire Co., which accounted for $110 million in sales. Sales for Cooper Europe were down about 9 percent.

Cooper cut production by 1 million tires to control inventory levels, Weaver said on the conference call, resulting in an $8 million charge. The tiremaker spent another $8 million to close a Georgia plant as part of its cost-cutting efforts.

The company underestimated the time needed to retool plants and train workers to build the more complex tires generally bought by sport-utility-vehicle and luxury-car owners, S&P's King said.

``Cooper has had a tough two or three years now,'' King said. ``They have tried to adjust their production mix to the more premium tires and they have had some hiccups that have set them back.''

To contact the reporter on this story: Jeff Bennett in Southfield, Michigan, at jbennett17@Bloomberg.net

Last Updated: August 3, 2006 17:21 EDT