Goodyear posts 3Q loss of $48 million despite record sales
Goodyear Tire & Rubber Co. reported a net loss of $48 million on record sales of $5.3 billion for the third quarter ended Sept. 30, 2006. That compares to net income of $142 million on sales of $5 billion for the third quarter of 2005.
The loss includes $126 million in after-tax restructuring charges. Of those charges, $107 million is related to the previously announced plan to close the Tyler, Texas, tire manufacturing plant.
The results also reflect both higher raw material costs of $249 million -- offset partially by $225 million of improved price/mix -- and lower tire volume.
The increase in sales was driven by improved pricing and product
mix, particularly in the North American Tire business unit, and the favorable impact of currency translation, according to Goodyear. The total was a quarterly sales record.
Tire unit volume was 55.8 million units in the quarter, compared to 58.4 million units in 3Q 2005. Goodyear attributed the 4% decrease in part to the company's move to exit certain segments of the private
label tire business in North America. Revenue per tire increased 8%.
Segment operating income for the third quarter was $313 million, a
decrease of 5% compared to the same period a year ago.
"Despite ongoing market weakness in North America and record high raw
material costs, we continue to demonstrate the strength of our business model changes and successful product portfolio," said Chairman, CEO and President Robert Keegan.
"After a challenging first half, our European Union business achieved
year-over-year improvements in sales, units and segment operating
income. Our key business strategies are also continuing to drive
excellent results in the Asia Pacific, Latin America and Eastern Europe, Middle East and Africa tire businesses.
"Although we are in the midst of a strike by the United Steelworkers in North America, we continue to work hard for a contract that is fair to all stakeholders and puts Goodyear on a level playing field with our competitors," said Keegan. "In the meantime, we are executing on our contingency plans to continue providing our customers with outstanding value, products and services."
All five of the company's tire business units achieved sales that were a record for any quarter. The European Union; Eastern Europe, Middle East and Africa; and Asia Pacific businesses each achieved segment operating income records.
North American Tire: operating income, $19 million; sales, $2.4 billion; tire unit sales, 23.5 million.
European Union Tire: operating income, $81 million; sales, $1.26 billion; tire unit sales, 16.5 million.
Eastern Europe, Middle East and Africa Tire: operating income, $77 million; sales, $430 million; tire unit sales, 5.6 million.
Latin American Tire: operating income, $77 million; sales, $407 million; tire unit sales, 5.3 million.
Asia Pacific Tire: operating income, $28 million; sales, $380 million; tire unit sales, 4.9 million.
Goodyear's Engineered Products business unit posted operating income of $31 million on sales of $372 million for the third quarter. That compares to operating income of $27 million on sales of $407 million for the same period in 2005.
For the first nine months of 2006, Goodyear posted net income of $28 million on record sales of $15.3 billion. That compares to net income of $279 million on sales of $14.8 billion during the year-ago period.
Tire unit volume for the first nine months totaled 163.8 million units, a decrease of 4% from a year ago. Segment operating income was $891 million, compared to $938 million in the first nine months of 2005.
Divestitures in 2005 reduced sales in the first nine months of 2006 by
approximately $211 million, segment operating income by $33 million, and volume by 800,000 units.