Goodyear strike leads to net loss in first quarter

Akron, Ohio - Goodyear said its recovery from the United Steelworkers´ three-month strike late last year is going "much better than expected" though the Akron-based tyre maker posted a net loss of $174 million in the first quarter and sales inched up less than 1 percent.

In the three months to 31 March, Goodyear reported sales of $4500 million, compared with $4460 million a year ago. In the first quarter of 2006, the firm had posted net income of $74 million.

Goodyear attributed its net loss to the strike, charges to change its salaried benefit plan and rationalisations from plant closures. However, improved pricing and product mix offset raw material costs.

In North American Tire, Goodyear´s largest business segment and the focus of the strike, the company reported an 18.6-percent decline in tyre unit volume to 19.3 million units from 23.7 million units in the quarter. Sales for the unit fell 9.9 percent to $2020 million from $2240 million a year ago. The firm attributed the sales losses to both the strike and its decision to exit certain parts of the private label tyre business.

North American Tire posted a segment operating loss of $20 million vs. a gain of $43 million for the same period in 2006.

Total segment operating income from all of Goodyear´s business units fell 19.9 percent to $226 million from $282 million a year ago. The firm attributed the decline to a $34 million impact from the strike as well as a one-time $30 million settlement from suppliers in 2006.

Overall, Goodyear said it saw improved profitability from increased replacement market sales in the first quarter, leading it to reduce its estimated impact from the strike on the North American Tire unit to $100 million to $120 million for the year. Previously, the firm expected a negative impact of $200 million to $230 million for 2007.

Goodyear's Engineered Products business was listed as a discontinued operation because of its pending sale.

From Rubber & Plastics News (A Crain publication)