Goodyear is reporting improved tire unit volumes, sales and segment operating income, as well as a significantly smaller net loss for the first quarter of 2010 despite a one-time charge related to a currency devaluation in Venezuela.
The company lost $47 million (19 cents per share), compared with a loss of $333 million ($1.38 cents per share) for last year’s first quarter.
“We are very pleased with our strong first quarter performance,” says Richard J. Kramer, president and CEO. “As markets around the world continue to improve, we are starting to see the benefits of the strategic actions we took last year, including our commitment to launch innovative new products during an economic downturn. The strategic actions contributed to strong growth in both sales and earnings, positioning us well as the global economy continues its recovery.”
On April 13, Kramer succeeded Robert J. Keegan in assuming the company’s top management spot. Keegan remains with the firm as its executive chairman.
“As I take over the role as the company’s CEO, I am optimistic about the tire industry and confident that Goodyear’s brands, focus on innovation, leading distribution and excellent leadership team position us strongly for the future,” Kramer says.
His strategic priorities as CEO will include continuing to drive the company’s innovation engine with new products; increasing operating efficiencies throughout the supply chain; improving earnings, especially in the North American Tire division; expanding growth in emerging markets; enhancing the capital structure; and continuing to build its leadership team, according to Kramer.
“I am confident that our focus on these priorities will enable Goodyear to gain from the recovery in industry volumes and help us overcome the challenges before us, specifically higher raw material costs,” he says.
Goodyear’s first quarter 2010 sales were $4.3 billion, up 21 percent from last year at this same time.
Sales reflect the $399-million impact of a 14 percent increase in tire unit volume due to improved global demand and growth in emerging markets. Sales were also positively impacted by $224 million in favorable foreign currency translation and by $125 million from higher sales in other tire-related businesses, primarily third-party chemical sales in North America.
The company had a segment operating income of $240 million, compared to a segment operating loss of $176 million in the year-ago quarter. Compared to the prior year, first quarter 2010 segment operating income reflects improved global demand, which resulted in higher sales and increased production levels, along with actions that reduced costs by $148 million. The 2010 quarter benefited from $283 million in lower raw material costs, including $38 million of savings actions taken to reduce these costs, Kramer reports.
The first quarter was impacted by charges of $99 million (41 cents per share) resulting from the devaluation of the Venezuelan bolivar fuerte in January, costs related to a debt exchange offer of $5 million (2 cents per share) and $5 million (2 cents per share) due to rationalizations, asset write-offs and accelerated depreciation; and gains of $8 million (3 cents per share) on asset sales, $8 million (3 cents per share) related to settlements with certain suppliers and $5 million (2 cents per share) resulting from various discrete tax benefits.
North American Tire’s first quarter 2010 sales increased 15 percent from last year to $1.8 billion, reflecting a 9 percent increase in tire unit volume and strong price/mix performance. Original equipment unit volume increased 45 percent, primarily in the consumer business due to higher vehicle production. Replacement tire shipments were up slightly from last year. Sales were positively impacted by $121 million from higher sales in other tire-related businesses, primarily third-party chemical sales.
A segment operating loss of $14 million was a $175-million improvement over last year, driven by lower raw material costs of $132 million, higher volume, price/mix improvements, increased productivity and cost reductions. The quarter was negatively impacted by $44 million in increased pension expense.
For more information, visit www.goodyear.com/corporate.