Goodyear sells less, earns more in 3Q
Goodyear Tire & Rubber Co. posted net income of $195 million on net sales of $5.0 billion for the third quarter ended Sept. 30, 2013. That compares to income of $133 million on sales of $5.3 billion for the same period last year.
Segment operating income was up 24%, from $348 million to $431 million, a third-quarter record. The company’s income-to-sales ratio was 3.9%.
“As the industry continues to recover, we see strong volume growth in the segments we are targeting,” says Richard Kramer, chairman and chief executive officer. “While we continue to be disciplined in our approach, we are seeing growth in unit volumes, including in our North America business, driven by the Goodyear brand.”
All four of Goodyear’s regional businesses achieved higher operating income in the quarter compared to the year-ago period, with North America posting record third-quarter operating income. Three businesses posted higher tire unit volumes than last year.
Third-quarter 2013 sales reflect $82 million in higher tire unit volumes, more than offset by $178 million in lower sales in other tire-related businesses, most notably a decrease in the price and volume of third-party chemical sales; $89 million in lower price/mix, despite continued favorable mix; and $77 million in unfavorable foreign currency translation. Tire unit volumes totaled 42.6 million, up 2% from 2012.
North American segment, 3Q 2013
Tire unit sales: 15.8 million (up 1.3%)
Sales: $2.2 billion (down 9.0%)
Operating income: $161 million (up 24%)
North America’s third-quarter sales reflect a $170 million decline in sales in other tire-related businesses, most notably a decrease in the price and volume of third-party chemical sales. The impact of increased tire unit volumes was more than offset by lower price/mix. Original equipment unit volume was up 5%. Replacement tire shipments were flat, according to Goodyear.
Goodyear’s third-quarter 2013 net income available to common shareholders was $166 million (62 cents per share), a third-quarter record and up 51% from $110 million (41 cents per share) in the 2012 quarter. All per share amounts are diluted.
For the full year of 2013 in North America, Goodyear’s industry outlook is unchanged. The company says it expects consumer replacement as well as commercial replacement and commercial original equipment volumes to be at essentially 2012 levels. It expects consumer original equipment volumes to be up approximately 5%.
“We now expect to see record segment operating income of more than $1.5 billion in 2013, and continue to target 10% to 15% annual growth in segment operating income through 2016,” says Kramer.
“As previously announced, we will take the first steps in our capital allocation plan in the fourth quarter with our reinstated quarterly dividend.” The company continues to target positive cash flow, excluding pension pre-funding, through 2016.