The good times keep rolling for Goodyear

Published on May 6th, 2010

It’s looking to be another bumper year for Goodyear based on their first quarter figures that are pointed due north. Things definitely appear promising with a new Chief Executive Officer, increased sales of about 21 per cent from higher unit sales, higher segment operating income with some help from a record first quarter in the Asia Pacific region, cost reduction savings improving and one minor hiccup with a net loss of 19 cents per share due to the Venezuelan devaluation.

Richard J. Kramer, the new CEO, took over on April 13 this year and is pleased with the way things are going currently.

“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,” he said.

“We are very pleased with our strong first quarter performance. 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,” he added.

Kramer explained that his strategic priorities right now includes continuing to drive the company’s innovation engine with new products, increase the operating efficiencies, improve earnings especially in the North America market and enhancing its capital structure.

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Goodyear’s first quarter 2010 sales were $4.3 billion, up 21 percent from the 2009 quarter. First quarter sales reflect the $399 million impact of a 14 per cent 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 segment operating income of $240 million in the first quarter of 2010 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.

The 2010 first quarter was impacted by charges of $99 million (41 cents per share) resulting from the devaluation of the Venezuelan bolivar fuerte in January 2010, 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.  All amounts are after taxes and minority interest.

Goodyear’s first quarter 2010 net loss was $47 million (19 cents per share), compared with a loss of $333 million ($1.38 cents per share) in the 2009 quarter.  All per share amounts are diluted.

Asia Pacific Tire First Quarter
(in millions) 2010 2009
Tire Units 5.2 4.1
Sales $484 $341
Segment Operating Income $69 $15
Segment Operating Margin 14.3% 4.4%

Asia Pacific Tire’s first quarter sales increased 42 percent from last year to $484 million primarily due to a 27 percent increase in tire unit volume and favorable foreign currency translation. Original equipment unit volume increased 48 percent, resulting from higher vehicle production.  Replacement tire shipments were up 16 percent.

Segment operating income of $69 million increased $54 million over last year and was a first quarter record.  The increase was due to price/mix improvements, higher volume, actions to reduce costs and favorable foreign currency translation.

“In Asia Pacific, Goodyear continues to build on a positive momentum generated over the past four quarters, which included several record-breaking earnings performances,” said Pierre E. Cohade, president of Goodyear Asia Pacific.  “Our first quarter 2010 performance, though strong across the business, was mainly driven by outstanding results in China and India as we capitalize on continued economic growth in these emerging markets,” he said.

“We are also delighted that our new product innovations and Goodyear branded retail network are leading the way for us as we continue to be recognized by industry experts and the media as evidenced by the latest wins we received in China for our Eagle F1 Asymmetric and Assurance tires,” said Cohade.

text: Dinesh Appavu  pix: Goodyear

Comments

  1. Posted by Mohammed Iqbal Hossain on May 6th, 2010, 07:11

    Dear Sir’s,

    I feel proud to know that Goodyear sales increased 42% more than previous year 1st quarter! Bcoz, I get the chance to became Goodyear Tires Distributor in Bangladesh just from Feb’09 & at the first year of my Goodyear Distribution from Mar’09-Mar’10 I imported near about 45,000 pcs Goodyear tires from Thailand, Indonesia, Malaysia & China. So, I fall into emotional once found this kind of winning news about Goodyear…..
    Thanks a lot Mr. Jitender Kaul to give me the opportunity to become the part of Goodyear family. Thanks again and again to all Goodyear associates from my heart……

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