Goodyear Tire & Rubber Co. suffered a net loss of $63.2 million for the first quarter of 2002, 35% higher than the $46.7 million net loss in the first quarter of 2001.
The results were negatively affected by the following:
* a pre-tax charge of $10 million principally related to the return of inventory to Goodyear following the April 6, 2002, closure of Penske Automotive Centers in the United States.
* approximately $95 million in costs resulting from significant production cutbacks in the
fourth quarter of 2001 due to inventory reduction programs and lower demand during
that period.
* $13 million in foreign currency exchange, primarily due to currency devaluation in
Argentina.
"While I am disappointed in reporting a loss, we expect to make progress in the second quarter," said Sam Gibara, Goodyear's chairman and chief executive officer.
"Our commitment to cash generation continues to remain a priority. Goodyear's working capital requirements at the end of the first quarter were over $1 billion below comparable levels a year ago."
Goodyear's worldwide sales in the first quarter were $3.3 billion in 2002, down 3% vs. 2001. The company sold 53 million tires, up .7% from the same period last year.
Capital expenditures in the first quarter were down 27%, from $103.9 million in 2001 to $75.8 million.
In North America, unit volume during the first quarter in 2002 was up 1.5% compared to 2001. However, replacement volume decreased 2.5%
Shipments to original equipment customers were up 10.5%.
Because of the higher original equipment volume, the Ford Motor Co. tire replacement program, and price first-quarter price increases, 2002 first-quarter sales were up. Goodyear supplied some 500,000 tires in
connection with the Ford replacement program, which ended on March 31.
Goodyear said the operating loss in the first quarter was "primarily a result of higher costs
due to the impact of fourth quarter 2001 production cutbacks, the charge related to the Penske business and a shift in channel and product mix."
Sales in the European Union Tire Division were down 5%, while tire unit sales were down more than 3%. However, sales and unit volume were up in the Eastern European, Africa and Middle East Tire Division and in Asia.
