Income, sales and units sold were down in 2002, says Goodyear
Goodyear Tire & Rubber Co. reported a net loss of $1.1 billion for 2002. That compares to a net loss of $203.6 million in 2001.
However, the 2002 results include the non-cash tax valuation allowance charge of $1.08 billion "to establish a valuation
allowance against federal and state deferred tax assets," according to the company. The charge was taken in the fourth quarter.
The 2001 results include net after-tax rationalization charges totaling $158.3 million, and an after-tax gain of $30.8 million resulting from the sale of assets.
Net sales for 2002 were $13.9 billion, down 2.1% from $14.1 billion in 2001. Tire volume of 214.3 million units was down by five million units, or 2.3%.
"Our 2002 results, especially in our North American Tire business, are extremely disappointing," says Goodyear CEO and President Bob Keegan. "However, we are beginning to make real and significant progress to improve those results.
"With our new bank agreements now in place, we have the financial resources and stability necessary to support our turnaround."
Goodyear singled out three main reasons why revenue decreased in 2002:
* lower tire unit volume in North America,
* lower revenues as a result of the December 2001 sale of the specialty chemical business (which contributed approximately $127 million of sales in 2001), and
* the effects of currency translation on
international results. Goodyear estimates that currency movements negatively affected sales by some $74 million in 2002, and decreased operating income by approximately $33 million.
In the fourth quarter, Goodyear reported a net loss of $1.1 billion on sales of $3.53 billion, compared with a net loss of $174 million on sales of $3.47 billion in the fourth quarter of 2001.
Tire unit volume in the fourth quarter totaled 53.6 million units, down from 54.5
million units sold during the fourth quarter in 2001.
"The turnaround in six of our seven businesses continued in the fourth quarter," says Keegan. "All four of our international tire businesses achieved a higher profit margin compared to a year ago, with margins more than doubling in three of those businesses."
Here's how Goodyear performed in each of business segments for the year.
North American Tire: The company posted sales of $6.7 billion compared to $7.1 billion the previous year, a decrease of 6.2%. Unit sales dropped from 112 million to 103.9 million. Shipments to original equipment customers, however, increased 5.5% for the year.
European Union Tire: In western Europe, Goodyear recorded sales of $3.3 billion compared to $3.1 in 2001, an increase of nearly 6%. Tire unit sales increased slightly, from 61.1 million to 61.5 million.
Eastern Europe, Africa, Middle East Tire:
Goodyear's sales were $807.1 million, up 14.7%from the previous year. Unit sales were up 15%.
Latin American Tire: The company recorded sales of $947.6 million, down 6.4% from the $1 billion posted in 2001. Some 19.9 million tire units were sold.
Asia Tire: Goodyear posted sales of $531.7 million at this business unit in 2002, up 7.6% from the $493.9 million in sales posted the previous year. Tire unit sales also increased in 2002 vs. 2001.
Engineered Products: Sales of $1.126 billion were about the same compared to the previous year. However, operating income was up almost 300%.
Chemical Products: The chemical division's sales of $937.9 million were down 9.5% vs. 2001. Operating income was up 15%, from $60.2 million to $69.4 million. (Goodyear recently announced it had retained Credit Suisse First Boston to advise on the possible divestiture of its chemical division.)
Goodyear's stock was trading at $5.17 a share as of the close of the New York Stock Exchange yesterday. That compares to a 52-week high and low of $23.70 and $3.35, respectively.