Less sales, more profit for Goodyear in 1Q
Goodyear Tire & Rubber Co. reported net income of $26 million on net sales of $4.9 billion for its first quarter ended March 31, 2013. That compares to a net loss of $11 million on sales of $5.5 billion for the same period last year.
Segment operating income was up 3.4% quarter to quarter, from $292 million to $302 million. Goodyear says the increase reflects $230 million in lower raw material costs before the benefit of cost savings actions, and cost-reduction activities that exceeded inflation. The company's net income-to-sales ratio was 0.5%.
“Despite a tough economic environment, we continue to achieve solid earnings improvement,” says Richard Kramer, chairman, CEO and president.
“Our first-quarter earnings demonstrate that our strategic focus on improving productivity and selling innovative products in targeted market segments where our brands add value is working, especially in North America, where our business continues to outperform expectations.”
Here are the first-quarter 2013 results for the North American Tire business unit (with the comparison to 1Q 2012 in parentheses).
Tire units: 14.8 million (down 6.3%).
Sales: $2.2 billion (down 13.2%).
Segment operating income: $127 million (up 58.7%).
Segment operating margin: 5.9% (vs. 3.2%).
Three of Goodyear’s four regional businesses posted higher earnings: North American Tire, Asia Pacific Tire and Latin American Tire.
“In Europe, we are taking steps to address weak industry demand brought about by recessionary conditions that continue to impact the auto and tire industries," says Kramer. "We are executing a three-point plan to address profitability in this region."
The company continues to target positive cash flow in 2013, excluding pension pre-funding, according to Kramer.
“We remain confident in our full-year outlook and continue to expect global segment operating income of $1.4 billion to $1.5 billion in 2013, which would be up more than 12% from 2012 and a record."