Goodyear posts net income of $147 million and sets first-quarter sales record
Goodyear Tire & Rubber Co. reported net income of $147 million on net sales of $4.9 billion for the first quarter ended March 31, 2008. That compares to a net loss of $174 million on sales of $4.5 billion for the same period last year.
Goodyear's income-to-sales ratio was nearly 3% a far cry from the first quarter of 2007, when it was negative 3%.
The record first-quarter sales were achieved despite lower volume sales. Higher prices, a richer product mix and favorable exchange rate spurred the 10% increase in sales.
Lower volume primarily resulted from weak original equipment markets in North America, as well as soft consumer replacement demand in North America and Europe, particularly for low-value-added tires.
Segment operating income of $367 million set a first-quarter record, benefitting from improved pricing and product mix and favorable currency translation. It was up 62% from last year's strike-affected 1Q, when Goodyear posted segment operating income of $226 million.
"Our excellent first-quarter results demonstrate the success of our strategies to grow our higher-margin premium product lines, reduce costs and pay down debt," says Robert Keegan, chairman, CEO and president.
"Each of our four businesses improved margins and operating income as we capitalized on attractive growth opportunities in targeted market segments."
Goodyear made additional progress during the first quarter on its four-year plan to achieve $1.8 billion to $2 billion in gross cost savings by the end of 2009.
"We have now achieved more than $1.2 billion in savings since beginning this plan and remain on target to reach our four-year goal," says Keegan.
All three of the company's business units outside of North America achieved record sales for any quarter during 1Q 2008. Segment operating income increased in all four businesses.
Here are the 1Q 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, 17.8 million (down 7.7%); sales, $2 billion; operating income, $32 million; operating margin, 1.6%.
Europe, Middle East and Africa Tire: tire units, 20 million (down .5%); sales, $1.9 billion; operating income, $172 million; operating margin, 8.8%.
Latin American Tire: tire units, 5.2 million (down 1.8%); sales, $530 million; operating income, $114 million; operating margin, 21.5%.
Asia Pacific Tire: tire units, 4.9 million (up 8.9%); sales, $465 million; operating income, $49 million; operating margin, 10.5%.
"While the economy remains a concern, we continue to be confident about the opportunities we see in the market and our ability to take advantage of them," says Keegan. "Over the last five years, our strategic decisions have better positioned Goodyear to face an economic downturn and to emerge as a stronger competitor."