Goodyear net profits increase 132% in 3Q
Goodyear Tire & Rubber Company posted net income of $72 million on net sales of nearly $4.4 billion for the third quarter ended Sept. 30, 2009. That compares to income of $31 million on sales of $5.1 billion for the same period a year ago.
Chairman, CEO and President Bob Keegan credits a "steady stream" of new products and the success of Goodyear's Assurance Fuel Max fuel-efficient tire line for helping lead the way. (Goodyear launched 15 products in the quarter, in addition to the 42 new tires introduced in the first half.)
“The success of our 'top line, cost and cash' actions, together with improving market conditions and lower raw material costs drove improved third-quarter earnings compared to both last year and to the second quarter,” he says.
“We are pleased that our results for the quarter were in line with our original operating plan despite more difficult conditions than we had expected at the beginning of the year.”
Goodyear's net income for 3Q09 compared to 3Q08 was up 132% despite the following:
* a 15% decline in sales, and
* a 7% decline in tire unit volume.
The company recorded segment operating income of $275 million in the third quarter, up from $266 million last year. The 3.4% increase "reflects continued weak industry demand, which resulted in a negative volume impact of $64 million and under-absorbed fixed costs of approximately $107 million," according to the company.
For the first nine months of this year, Goodyear posted a net loss of $482 million on net sales of $11.8 billion. That compares to net income of $253 million on sales of $15.3 billion for the same period in 2008.
Goodyear says the 22.7% decrease in sales is a reflection of a 14% decline in tire unit volume ($1.7 billion); a reduction in sales in other tire-related businesses ($828 million); and unfavorable foreign currency translation ($1 billion).
Goodyear enters the fourth quarter with a better cash and liquidity position than it had entering the third quarter. The company credits positive cash flow and reduced working capital requirements for the improvement. In addition, inventory levels are more than $1 billion below the year-end 2008 level.
In 2010, Goodyear anticipates "year-over-year global industry growth... especially in markets for tires featuring high-value-added features, larger rim diameters and fuel-efficient technology."