Goodyear's quarterly income rises as NAT's sales fall

Akron, Ohio -- Goodyear reported a significant gain in net income for the second quarter-reaching $56 million (€41 million) compared to $2 million in 2006-as sales inched up 3.9 percent throughout the company despite a 2.7-percent decline in North American Tire (NAT) sales.

Goodyear's net sales rose to $4920 million from $4740 million a year ago. The Akron-based tyre maker attributed the gain to the launch of new products as well as record performances of its three emerging markets tyre businesses. Eastern Europe, Middle East and Africa Tire sales increased 13.5 percent, Latin American Tire sales improved 18.3 percent and Asia Pacific Tire sales grew 13.5 percent.

In the second quarter Goodyear also said the aftereffects from last year's united steelworkers strike cost it about $5 million in earnings.

In NAT, however, sales fell to $2280 million from $2340 million in 2006. Tyre unit volume also fell 10.7 percent to 20.8 million units from 23.3 million units a year ago. The company said the lower volume resulted from its decision in 2006 to exit certain segments of the private label tyre business as well as weak commercial and original equipment markets. These losses were partially offset by market share gains in higher-value branded tyres, improved pricing and mix and higher sales in chemical and other tyre-related businesses.

NAT's segment operating income of $53 million compared with $6 million in the year-before.

“With the actions we have taken the past four and a half years, we have created strong platforms for growth going forward,” said chairman and CEO Robert Keegan. “Likewise, our improving balance sheet gives us the flexibility to increase investments aimed at growing our core consumer and commercial tyre businesses.”

For the first half of the year, Goodyear's net sales rose 2.4 percent to $9420 million from $9200 million in 2006. The company reported a loss for the period of $118 million against profits of $76 million the previous year.

In NAT, sales fell 6.2 percent to $4290 million as tyre unit volume slipped 14.5 percent. Segment operating income fell 32.7 percent to $33 million from $49 million a year ago.

From Tire Business (A Crain publication)