Goodyear is reporting outstanding first quarter sales and income figures, setting records on several financial fronts. “Our excellent first quarter results demonstrate the success of our strategies to grow our higher-margin premium product lines, reduce costs and pay down debt,” says Robert J. Keegan, chairman and CEO. Goodyear’s first quarter 2008 sales were $4.9 billion, a 10 percent increase compared with the first quarter of 2007, offsetting lower volumes with higher prices, a richer product mix and favorable currency translation. Improved pricing and product mix in all four of the company’s businesses drove per-tire revenue up 7 percent over 2007’s figures, reflecting a successful strategy to focus on high-value-added tires. Lower volume primarily resulted from weak original equipment markets in North America as well as soft consumer replacement demand in both North America and Europe, particularly for low-value-added tires. “Each of our four businesses improved margins and operating income as we capitalized on attractive growth opportunities in targeted market segments,” says Keegan. “While the economy remains a concern, we continue to be confident about the opportunities we see in the market and our ability to take advantage of them. Over the last five years, our strategic decisions have better positioned Goodyear to face an economic downturn and to emerge as a stronger competitor.” Goodyear says it made additional progress during the first quarter on its plan to glean $1.8 billion to $2 billion in gross cost savings by the end of 2009. “We have now achieved more than $1.2 billion in savings since beginning this plan and remain on target to reach our four-year goal,” Keegan explains. Segment operating income set a first quarter record at $367 million in 2008, up 62 percent from $226 million in the strike-affected 2007 first quarter. Gross margin was 19.9 percent for the 2008 first quarter, compared to 16.8 percent last year. Segment operating income rose through improved pricing and a heightened product mix to $157 million, which more than offset increased raw material costs of $13 million. First quarter 2008 net income from continuing operations was $147 million (60 cents per share). This compares to a loss from continuing operations of $110 million (61 cents per share) in the year-ago quarter. Including discontinued operations, Goodyear had a net loss of $174 million (96 cents per share) in 2007’s first quarter. All per share amounts are diluted. The 2008 quarter included after-tax financing fees related to debt repayment of $43 million (18 cents per share), $13 million (5 cents per share) in after-tax rationalization charges, an after-tax gain on asset sales of $33 million (13 cents per share) and an after-tax gain on an excise tax settlement in Latin America of $8 million (3 cents per share). All three of the company’s endeavors outside of North America achieved record sales as the emerging markets continued to grow. Income for the Latin America and Asia Pacific divisions topped the numbers of any previous quarter. Income for the Europe, Middle East and Africa businesses set first quarter records. North American Tire’s first quarter sales decreased 1 percent from last year. The 2007 quarter included about $150 million in sales from T&WA, which was divested in December. Sales in the 2008 quarter were impacted by reduced original equipment volume resulting from lower vehicle production and a decline in the consumer replacement tire market, particularly for low-value-added tires. Sales benefited from strong pricing and product mix as well as market share gains for Goodyear and Dunlop tires in the consumer replacement market. Segment income increased $52 million, primarily due to an improved pricing and product mix of $67 million, which more than offset increased raw material costs of $5 million. Lower selling, administrative and general expenses and structural cost savings, including savings from the 2006 contract with the USW, were partially offset by lower volume and transitional manufacturing costs. The company estimates the USW strike reduced 2007 first quarter sales by $102 million and segment operating income by $34 million. Europe, Middle East and Africa Tire’s first quarter figures set sales records, increasing 16 percent over last year due to favorable currency translation, improved pricing and product mix and market share gains in the consumer replacement and commercial replacement markets. Segment income was a first quarter record; up 24 percent because of improved pricing and product mix of $40 million, which more than offset increased raw material costs of $4 million. Favorable currency translation and lower selling, administrative and general expenses offset higher manufacturing costs related to ongoing labor issues in France and higher transportation costs. Latin American Tire’s record first quarter sales marked a 29 percent increase over 2007 due to improved pricing and product mix and favorable currency translation. Segment operating income also set a record, increasing 46 percent compared to the prior year. Improved pricing and product mix of $37 million, a $12 million gain from the settlement of an excise tax case and favorable currency translation more than offset higher manufacturing costs and selling, administrative and general expenses. Asia Pacific Tire’s first quarter sales also broke previous records as they were up 21 percent over last year due to favorable currency translation, higher volume and improved pricing and product mix. Segment income increased 69 percent, setting yet another record. The improvement was due to improved pricing and product mix of $13 million, which more than offset $4 million in increased raw material costs, as well as higher volume, favorable currency translation and lower selling, administrative and general expenses, according to the company. For more information, visit www.goodyear.com/corporate. |
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