Goodyear reports net loss of $34.3 million for first half despite profitable second quarter
Today the Goodyear Tire & Rubber Co. reported net income of $28.9 million for the second quarter of 2002. Net income in the second quarter of 2001 was $7.8 million.
Worldwide, Goodyear's second quarter sales were $3.5 billion in 2002 vs. $3.6 billion in 2001. Tire unit volume in 2002's second quarter was 53.3 million units, down 4% from last year.
For the first six months of 2002, the company recorded a net loss of $34.3 million compared with a net loss of $38.9 million the first six months of 2001.
Sales for the first six months of 2002 were $6.8 billion compared with $7 billion in 2001. Tire unit volume was 106.3 million units, down 1.7% in the six-month period.
Goodyear's first half 2002 results include $10 million in pre-tax earnings from the company's participation in the Ford tire replacement program and a pre-tax charge of $10 million principally related to the April 2002 closure of Penske Automotive Centers in the U.S., the company said.
North American Tire unit volume in the second quarter of 2002 was down 8.8% from 2001 and down 4% for the first six months. Unit sales to the replacement market decreased 15.8% for the quarter and 9.5% for the six months.
Shipments to opriginal equipment customers were up 6.8% for the quarter and 8.5% for the six months.
Sales in both 2002 periods decreased due to reduced volume in the replacement market, which was adversely affected by certain distributors postponing purchases, the company said.
Higher selling prices positively impacted sales in both 2002 periods, Goodyear said.
Sales resulting from the Ford tire replacement program, which ended March 31, 2002, benefited the second quarter of 2001 and the first quarter of 2002. During the second quarter of 2001, North American Tire supplied about one million tires for this program, Goodyear noted. About 500,000 tires were supplied during the first quarter of this year.
Second quarter 2001 results include $20 million in pre-tax earnings resulting from the company's participation in the Ford Motor Co. tire replacement program and $4 million in pre-tax earnings contributed by the Specialty Chemical business, which the company sold in December 2001.
For the second quarter, "Our earnings more than tripled despite volatile and difficult economic and market conditions in much of the world," said Sam G. Gibara, chairman and chief executive officer. "Cost reduction programs and rationalization activities are paying off. We are also benefiting from lower raw material
costs. While we still face challenges, this was our best earnings performance since the second quarter of 2000," he said.
Goodyear adopted Statement of Financial accounting Standards No. 142 on Jan. 1, 2002. Earnings in 2001's second quarter and first half included amortization expense for goodwill and certain intangible assets of $7.4 million and $14.6 million, respectively.