Goodyear cleans up in North America
Goodyear Tire & Rubber Co. recorded net income of $212 million on net sales of $21 billion for its fiscal year ended Dec. 31, 2012. That compares to income of $343 million on sales of $22.7 billion for fiscal 2011.
The company's income-to-sales ratio was 1%.
Goodyear's segment operating income for the year was down 9%, from more than $1.3 billion to $1.2 billion. The decrease "primarily reflects weakness in Europe," according to the company.
The North American Tire business unit set a record for year-to-year earnings improvement. It also set a fourth-quarter earnings record.
"Our 2012 performance marks the second consecutive year we have exceeded $1.2 billion in segment operating income in a low-volume environment," says Richard Kramer, chairman, CEO and president. "These results have been driven by North American Tire's performance, which has momentum and, more importantly, sustainability."
North American Tire, fiscal 2012 (compared to fiscal 2011)
Sales: $9.6 billion (down nearly 2%).
Operating income: $514 million (up 86%).
Tire units: 62.6 million (down 5.1%).
Kramer says Goodyear is beginning to see the benefits of its strategic investments in China.
"We feel very positive about the progress made in our North American, Latin American and Asia Pacific businesses in 2012 and are confident in our ability to continue delivering improved profitability. As a result of our view of continued weakness in the European economy and its effects on the auto and tire industries, we are reducing our 2013 segment operating income expectation and are taking actions to ensure long-term competitiveness in the region."
For the fourth quarter, Goodyear posted net income of $7 million on net sales of $5 billion. That compares to income of $25 million on sales of nearly $5.7 billion in 4Q 2011.
Goodyear's 11% decrease in fourth-quarter sales reflects $338 million in lower tire unit volumes; $221 million in lower sales in other tire-related businesses, most notably third party chemical sales in North America; and $85 million in unfavorable foreign currency translation.
Tire unit volume in the fourth quarter totaled 40 million, down 7% from 2011, "primarily reflecting lower volumes in Europe."
North American Tire, 4Q 2012 (compared to 4Q 2011)
Sales: $2.3 billion (down 10.4%).
Operating income: $116 million (up 740%).
Tire units: 15.8 million (down 4.8%).
In 2013, Goodyear says it expects to achieve segment operating income of $1.4 billion to $1.5 billion, which would be a record year-to-year increase of more than 12%.
"Given the deterioration in Europe, we have announced profit improvement plans to return the Europe, Middle East and Africa business to historical margins," says Kramer. "Our North America business is delivering well beyond our prior expectations, and we continue to target positive cash flow in 2013."
Goodyear also continues to expect long-term growth in the global tire industry but at a slower pace near term than previously forecast. The company expects that its full-year tire unit volume for 2013 will reflect "a low single digit percentage growth rate compared to 2012."
For the full year in North America, Goodyear expects the consumer replacement market to be up 2% and consumer original equipment to be up approximately 5%. Commercial replacement and original equipment volumes are expected to remain at about 2012 levels.