Goodyear posts sales, income loss for 1Q
Goodyear Tire & Rubber Co. posted $3.5 billion in sales on a net loss of $333 million during the first quarter of 2009. That compares to sales of $4.9 billion, a record for the company, on net income of $147 million achieved during the first quarter of 2008.
"The quarter's sales reflect the $766 million impact of a 20% decline in tire unit volume due to significantly lower global industry demand," say Goodyear officials. "In addition, unfavorable currency translation reduced sales by $484 million. Sales benefited from price/mix improvements that drove revenue per tire, excluding the impact of foreign currency translation, up 3.4% over the 2008 quarter despite a significant drop in commercial truck tire unit volume."
Goodyear experienced a segment operating loss of $176 million during the third quarter of 2009, which reflects "weak industry demand across its businesses, resulting in a negative volume impact of $138 million, under-absorbed fixed costs of approximately $200 million, and declines in its other tire-related businesses. Higher raw material costs, which increased 31%, or approximately $332 million, more than offset improved price/mix of $161 million."
Goodyear's North American Tire segment posted sales of $1.54 billion vs. $1.99 billion achieved during the first quarter of 2008. The drop was due to "significantly lower industry demand," say Goodyear officials. "Original equipment unit volume declined 49%, resulting from lower vehicle production. Replacement tire shipments were down 10%."
The North American Tire unit also suffered a segment operating loss of $189 million, which was "significantly impacted by lower sales and production levels, which drove a negative volume impact of $37 million, under-absorbed fixed costs of $120 million, and declines in its other tire-related businesses. Increased raw material costs of $137 million more than offset price/mix improvements of $60 million."
"Our market presented us with the challenges we expected in the first quarter and in some cases more," says Goodyear Chairman, CEO and President Bob Keegan. "While we aren't satisfied with our results, they generally reflect the difficult market conditions."