Goodyear posts record sales and a net loss
Goodyear Tire & Rubber Co. posted a net loss of $11 million on record first-quarter net sales of more than $5.5 billion for the fiscal quarter ended March 31, 2012. That compares to income of $103 million on sales of $5.4 billion for the same period last year.
The net results included one-time charges of $86 million resulting from the early redemption of senior notes.
Segment operating income was down 10.7%, from $327 million to $292 million. First-quarter sales reflected a strong price/mix performance, which drove revenue per tire up 16% year-over-year, excluding the impact of foreign currency translation.
"I'm pleased with our results as our businesses posted solid operating income," says Richard Kramer, chairman, CEO and president "Our teams delivered these results in the face of a difficult volume environment and high raw material costs, with a strong focus on price/mix.
"Favorable results in North America, in spite of the weak industry environment, are a clear indication of our success in delivering innovation, targeting profitable market segments and driving operational excellence. As expected, Europe, Middle East & Africa's results were affected by weak economic conditions, which remain uncertain, and warm winter weather."
Here are the results from the North American Tire business unit (2011 results are in parentheses). Tire unit sales and overall sales were down, while segment operating income and operating margin were up.
Tire units: 15.8 million (vs. 17.1 million).
Sales: $2.5 billion (vs. $2.3 billion).
Segment operating income: $80 million (vs. $40 million).
Segment operating margin: 3.2% (vs. 1.7%).
North American Tire's first quarter 2012 sales increased 8% to $2.5 billion, also a first-quarter record. Overall unit sales were down nearly 8%, although original equipment volume was up 11%. Replacement tire shipments were down 14%, "reflecting weak industry demand and strong sales growth for Goodyear in the year-ago quarter," according to the company.
Excluding the impact of foreign currency translation, comparative revenue per tire was up 21%.
Outlook, according to Goodyear
Goodyear expects long-term growth in the global tire industry to continue, but at a slower pace than previously forecast due to continued economic weakness in multiple markets. Due to the weaker than expected first-quarter volumes, the company expects that its full-year tire unit volume for 2012 will be approximately 2% below 2011.
For the full year of 2012 in North America, Goodyear expects the consumer replacement market to be down between 1% and 3%; consumer original equipment up between 2% and 7%; commercial replacement to be between down 2% and up 2%; and commercial original equipment up between 10% and 15%.