Goodyear reports 2Q net income of $25.1 million
Goodyear Tire & Rubber Co. reported net income of $25.1 million on record sales $4.5 billion for the second quarter ended June 30, 2004. That compares to a net loss of $53 million on sales of $3.8 billion for the same period a year ago.
The $4.5 billion in net sales, an 18.4% increase vs. the second quarter of 2003, was the highest quarterly total in the company´s history. The previous record was $4.3 billion, posted during the first quarter of this year.
The increase in sales during the second quarter reflects improved pricing and product mix as well as higher unit volume, according to the company. Tire unit volume totaled 55 million units, compared to 52.8 million units in the 2003 period.
All seven of Goodyear´s business units were profitable, and reported higher segment operating income compared to the year-ago period. Total segment operating income was $285.8 million, up 91.7% from last year.
"With a relentless focus on delivering sustained growth and profitability to our shareholders, we have been directing our attention toward controlling costs, enhancing dealer relationships, focusing on high-margin product lines and introducing new products designed to please customers around the world," says Chairman, CEO and President Robert Keegan.
"This quarter´s profitable results are a direct reflection of the ongoing efforts of our associates and demonstrate that we are on the right track.
"While we still have work to do, we are pleased by the success we have
achieved to date, particularly the traction we are gaining in our North American Tire business, which is reporting a quarterly profit for the first time in nearly two years. The company continues to work on improving both its operating results and capital structure; however, we are confident that we are executing the right strategies.
"We expect our year- over-year momentum to continue through the second half," adds Keegan.
Impacting the second-quarter results were the following:
* the consolidation of South Pacific Tyres Ltd., a
tire manufacturer in Australia and New Zealand, and T&WA, a tire-mounting operation in the United States. The consolidation resulted in a $327 million positive impact on sales, a 1.3 million unit increase in tire volume and a $4.4 million impact on net
(The operations were consolidated in accordance with U.S. Financial Accounting Standards Board Interpretation No. 46.)
* after-tax rationalization charges of $8.6 million and an after-tax charge of $9 million related to external professional fees associated with the previously disclosed accounting investigation.
* asset sales, which resulted in an after-tax gain of $1.7 million.
* currency translation. Goodyear estimates the effects of currency translation had a positive impact of close to $86 million on second-quarter sales.
* raw material cost increases, which offset the savings
generated from rationalization actions and improved productivity.
Goodyear recently announced additional plans to refinance and lengthen the maturity of one of its U.S. credit facilities. The company says it will continue to use specific strategies to address high levels of debt and unfunded pension obligations.
In addition to further refinancing to lengthen debt maturities, Goodyear will explore potential asset sales and will ultimately seek increased equity funding to improve its credit profile.
Sales for the first six months of 2004 were a record $8.8 billion, an
increase of 20.6% compared to the $7.3 billion recorded during the first half of 2003. First-half tire unit volume of 110.7 million units was up 5% from the 105.4 million units sold during the same period a year ago.
Goodyear posted a net loss of $51.8 million for the first six months of 2004, compared to a loss of $249.5 million during the first half of 2003.