Goodyear posts $253 million loss in 2Q
Goodyear Tire & Rubber Co. reported a net loss of $253 million on net sales of $3.9 billion for the second quarter ended June 30, 2009. That compares to net income of $93 million on sales of $5.2 billion for the same period a year ago.
The company attributed the 25% decrease in sales to a 17% decline in tire unit volume ("due to significantly lower global industry demand"), the impact of currency translation, and a reduction in sales in other tire-related businesses (primarily third-party chemical sales by the North American Tire business unit).
Sales benefited from price/mix improvements that resulted in a 1.1% increase in revenue per tire, excluding the impact of foreign currency translation, over the 2008 quarter despite "a significant volume drop in commercial truck tire units, which have a higher revenue per tire than consumer tires," according to the company.
The company posted segment operating income of $24 million in the second quarter of 2009. That compares to operating income of $330 million in 2Q 2008, and a segment operating loss of $176 million in 1Q 2009.
"There is little debate as to the severity of the economic and industry downturn we have experienced the past three quarters," says Robert Keegan, chairman, CEO and president. "We are beginning to see some signs of economic stabilization and recovery, although still fragile at this stage and varied around the globe.
"Despite the significant impact this has had on our performance, we had a respectable and encouraging second quarter," he says. "Our results strengthened compared to the first quarter, as reduced raw material costs and our strategic actions aimed at our top line, cost savings and cash generation continue to have the desired effect.
"Our intense focus on emerging from the downturn in a position of strength is helping us significantly improve our competitiveness today."
Goodyear launched 19 new products in the second quarter, in addition to the 23 launched in the first quarter. The company is on pace to achieve its goal of more than 50 new product launches this year.
"We are now expanding our efforts in the high-volume, profitable mid-tier market segment, which is providing us market momentum despite the lower industry volume levels," says Keegan.
Here are the 2Q results of each business segment. The percentage change in tire units from last year to this year is in parentheses.
North American Tire: tire units, 14.8 million (down 19.1%); sales, $1.7 billion; operating loss, $91 million.
Europe, Middle East and Africa Tire: tire units, 15.8 million (down 15.5%); sales, $1.4 billion; operating loss, $15 million.
Latin American Tire: tire units, 4.6 million (down 14.8%); sales, $437 million; operating income, $73 million.
Asia Pacific Tire: tire units, 4.8 million (down 11.1%); sales, $426 million; operating income, $57 million.
"Our cash actions and strong working capital management drove strong cash flow performance in the quarter," says Keegan."Today we are a leaner, more efficient company, have expanded both our capabilities and our competitiveness globally, and have further enhanced our solid cash and liquidity position."