Goodyear records loss on record sales in Q3

Akron, Ohio - Goodyear posted a 5-percent gain in sales in the third quarter to $5.28 billion - a record for any quarter - yet earnings dropped dramatically both companywide and in the company´s North American Tire unit.

Goodyear posted a net loss in the quarter of $48 million, down from a profit of $142 million for the same period a year ago. In North American Tire, segment operating income fell 67.2 percent to $19 million from $58 million.

The results do not include any impact from the United Steelworkers' ongoing strike against 16 of Goodyear's North American plants as the strike commenced on 5 Oct. and the third quarter ended 30 Sept..

The impact on earnings does include, however, a charge of $107 million relating to Goodyear's plans to close its Tyler, Texas, tyre plant, which the Akron-based tyre maker announced on 30 Oct. The closing will affect 1100 employees.

Other factors affecting earnings include: a 4.5-percent decline in tyre volume and higher raw material costs of $249 million that were somewhat offset by $225 million of improved price and mix; an after-tax gain of $10 million from a supplier settlement; and an after-tax expense of $7 million related to accelerated depreciation for a plant closure in New Zealand. The tyre unit volume decrease to 55.8 million units was attributed primarily to Goodyear´s exit of certain segments in the private label tyre business.

"Despite ongoing market weakness in North America and record high raw material costs, we continue to demonstrate the strength of our business model changes and successful product portfolio," said Robert Keegan, chairman and CEO.

For the nine months, Goodyear posted net sales of $15 300 million, a 3.3-percent increase over $14 800 million a year ago. Net income in the period fell 90 percent to $28 million from $279 million in 2005.

From Rubber & Plastics News (A Crain publication)

Press release from Goodyear