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Goodyear achieves a 3.9% increase in 2Q sales

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Goodyear Tire & Rubber Co. posted net income of $56 million on net sales of $4.9 billion for the second quarter ended June 30, 2007. That compares to net income of $2 million on sales of $4.7 billion for the same period in 2006.

The overall 3.9% increase in sales was achieved despite a 2.7% decline in sales for the North American Tire business unit. The company primarily attributes the decrease to the following:

* its exit from certain segments of the private label tire business.

* softer original equipment and commercial replacement markets.

"Market share gains in higher-value branded tires, improved pricing and product mix and higher sales in chemical and other tire related businesses" helped offset the 2.7% decrease in sales, according to the company.

"Our strong second-quarter performance demonstrates successful execution against our strategies to improve our business and product mix, as well as the early stage benefits of a lower cost structure," says Robert Keegan, chairman, CEO and president.

"With the actions we have taken the past four and a half years, we have created strong platforms for growth going forward. Likewise, our

improving balance sheet gives us the flexibility to increase investments aimed at growing our core consumer and commercial tire businesses."

Second-quarter income from continuing operations was $29 million. That compares to a $33 million quarterly loss from continuing operations in 2006. (In March, Goodyear agreed to sell substantially all of its Engineered Products business unit for $1.475 billion to EPD Inc., an entity sponsored by Carlyle Partners IV L.P.G.)

Total segment operating income from continuing operations was $309

million, up 32% from the same period last year. Goodyear credits "significant improvement in North American Tire" as the main driver behind the increase. All five of the company's regional tire

businesses achieved higher segment operating income compared to the second quarter of 2006.

Improved pricing and product mix of approximately $155 million in the second quarter of 2007 more than offset increased raw material costs of approximately $55 million.

Here's how each business segment performed in the second quarter, with 2Q 2006 totals in parentheses.

North American Tire: tire units, 20.8 million (23.3 million); sales, $2.27 billion ($2.34 billion).

European Union Tire: tire units, 15 million (15.7 million); sales, $1.32 billion ($1.25 billion).

Eastern Europe, Middle East and Africa Tire: tire units, 4.8 million (5 million); sales, $436 million ($384 million).

Latin American Tire: tire units, 5.4 million (5 million); sales, $458 million ($387 million).

Asia Pacific Tire: tire units, 4.8 million (5 million); sales, $428 million ($377 million).

The Asia Pacific Tire, Latin American Tire and Eastern

Europe, Middle East and Africa Tire segments achieved record sales for any quarter.

Goodyear's stock price on the New York Stock Exchange closed at $32.05 a share on Wednesday, July 25.

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