Goodyear sees signs of recovery but Q3 sales are 15% down

ERJ staff report (TB)

AKRON (Oct. 28, 2009) - Goodyear's net income for the third quarter more than doubled to $72 million from $31 million a year earlier, despite 15.2-percent lower sales of $4.39 billion during the period.

It also posted segment operating income of $275 million in the third quarter, compared with $266 million in 2008 and $24 million in this year's second quarter. In addition, sales in the third quarter rose 11 percent from the second quarter.

“The strength of our brands and steady stream of new and innovative tyres such as our branded fuel-efficient tyres provided marketplace momentum and led a strong third-quarter performance,” Chairman and CEO Robert J. Keegan said in a prepared statement.

For the first nine months of 2009, the Akron-based tyre maker posted a net loss of $482 million compared with net earnings of $253 million in 2008. Sales fell 22.7 percent to $11.9 billion.

Goodyear said it expects the industry to grow in 2010, particularly for value-added tyres, such as those with larger rim diameters and fuel-efficient technology.

Looking closer at third-quarter numbers, the sales decline includes a 7-percent drop in unit volume caused by lower industry demand; $279 million lower sales of other tyre-related businesses, mainly third-party chemical sales by North American Tire; and a $159 million decrease caused by unfavorable foreign currency translation.

Goodyear launched 15 new products in the quarter, bringing to 57 the number brought to market this year, exceeding its 2009 goal of 50 new product launches.

The firm did benefit from $207 million in lower raw material costs during the quarter. Goodyear also achieved $196 million in new savings on the period, bringing the total to $540 million for the year's first nine months. Another 300 jobs were shed worldwide, bringing the year's total to 5,800, already surpassing the full-year target of 5,000 positions.

Among business segments, tyre volume in North America dropped 1 million units to 17.1 million, with OE sales off 21 percent and replacement sales up slightly. North American sales dipped 14.8 percent in the quarter to $1.86 billion, with segment profits at $2 million, better than the $19 million loss last year. Nine-month sales were down 19.6 percent to $5.1 billion.

In the Europe, Middle East and Africa area, operating income fell 20.9 percent to $106 million, with sales down 18.3 percent to $1.58 billion. Unit sales were off by 1.9 million to 17.8 million.

Operating profits in Latin America were off just a bit to $99 million as sales decreased 16.4 million to $486 million. Tyre units dipped 300,000 tyres to 5 million.

Earnings in Asia-Pacific actually rose 36 percent to $68 million, with sales off about 3 percent to $456 million as units were steady at 5.1 million tyres.

From Tire Business (A Crain publication)

Press release from Goodyear