Goodyear announces financial results, plans to close plant
The Goodyear Tire & Rubber Co. today reported fourth quarter and full-year 2010 results, and announced plans to close its plant in Union City, Tenn.
The company’s fourth quarter 2010 net loss was $177 million, compared with net income of $107 million in the 2009 quarter. For the year, the company reported a net loss of $216 million compared to a net loss of $375 million in 2009.
Quarterly segment operating income was $224 million, while full-year segment operating income was more than $900 million.
Goodyear's fourth quarter 2010 sales were $5.1 billion, up 14% from the 2009 quarter. Tire unit volumes totaled $45 million, up 4% from 2009.
Fourth quarter sales reflect the $130 million impact of the increase in volume. Sales benefited from record price/mix improvements, which drove revenue per tire, excluding the impact of foreign currency translation, up 12% over the 2009 quarter. Sales also were impacted positively by a $159 million increase in sales in other tire-related businesses, primarily third-party chemical sales in North America. Unfavorable foreign currency translation reduced sales by $111 million.
The company had segment operating income of $224 million in the fourth quarter of 2010, down $25 million from the year-ago quarter. Segment operating income reflected improved price/mix of $315 million and the benefits of higher volume, offset by $430 million in higher raw material costs ($397 million net of raw material cost reduction actions). Unfavorable foreign currency translation reduced segment operating income by $17 million. Actions to reduce costs provided a $119 million benefit.
"I'm very pleased with Goodyear's performance in the fourth quarter and the full year of 2010. Our operating results reflect significant recovery, with improvement across all of our businesses versus last year despite escalating raw material costs," says Richard Kramer, chairman and chief executive officer.
"The percentage of new products in our overall lineup is the highest ever and is driving record revenue per tire increases and continued success in targeted markets," he adds.
"Our selective approach to the business continues to present strong profit growth opportunities. Goodyear's leading brands and technology offer customers in targeted segments with an outstanding value proposition," Kramer says..
"We also remain firmly committed to improving our competitiveness and, as a result, have announced plans to close our Union City, Tenn. plant."
Goodyear's annual sales for 2010 were $18.8 billion, up 16% from $16.3 billion in the 2009 period. Sales reflect the $1 billion impact of an 8% improvement in tire unit volume as well as a $582 million increase in sales in other tire-related businesses, primarily third-party chemical sales by North American Tire. Sales also reflect price/mix improvements and unfavorable currency translation. Revenue per tire, excluding the impact of foreign currency translation, increased 6% over 2009.
The company's 2010 segment operating income of $917 million is up from $372 million in 2009 reflecting improved profitability in all four of the company's business units. Compared to the prior year, 2010 segment operating income reflects higher sales, actions that reduced costs by $467 million and a significant recovery in under-absorbed fixed costs. These improvements more than offset higher marketing costs in support of the company's brands and emerging market growth, wage inflation and foreign currency translation, the company notes.
Compared to 2009, improved price/mix of $689 million offset $685 million in higher raw material costs ($549 million net of raw material cost reduction actions).