Goodyear posts $76.9 million loss, record sales
Goodyear Tire & Rubber Co. posted a first-quarter net loss of $76.9 million on record sales of $4.3 billion for the first quarter ended March 31, 2004. That compares to a net loss of $196.5 million on sales of $3.5 billion for the first quarter in 2003.
The $4.3 billion in sales, helped by an estimated $200 million from currency translation, was the largest quarterly total in Goodyear history.
First-quarter tire unit volume totaled 55.7 million units vs. 52.6 million units 12 months earlier, an increase of nearly 6%. The consolidation of South Pacific Tyres
Ltd., a tire manufacturer in Australia and New Zealand, and T&WA, a wheel-mounting operation in the United States, increased tire unit volume by 1.8 million units.
Segment operating income was up more than 400%, from $42 million to $216.1 million.
Six business units, including North American Tire operations, improved both segment operating income and segment operating margin compared to the first quarter of 2003. The Asia Tire business unit was down in both.
"Our operating results have improved dramatically as a result of strong volume, improved pricing and a richer product mix, as well as our cost reduction efforts and the strategies we are implementing to improve our business economics," says Robert Keegan, chairman and CEO.
"While challenges remain, we are pleased with the continuing success of our turnaround strategies and with our progress to date."
Keegan says those challenges include high levels of debt and unfunded pension obligations. In its financial statement, Goodyear said it "will work on these with specific strategies including refinancing to lengthen debt maturities, potential asset
sales to reduce the obligations, and ultimately, seeking increased equity funding to improve Goodyear's credit profile."
Also impacting first-quarter results were the following:
* after-tax rationalization charges of $57.7 million as a result of staff reductions
in North America, Europe and Latin America;
* a $19 million after-tax charge recorded in the company's Engineered Products business
unit related to restatements recorded in the first quarter;
* after-tax rationalization charges of $19.9 million due to administration and manufacturing consolidations;
* an after-tax charge of $15.3 million related to external professional fees associated with the previously disclosed accounting investigation;
* an after-tax expense of $11.6 million relating primarily to a fire at a European
tire manufacturing facility;
* a $4.3 million after-tax charge for accelerated depreciation primarily related to the closure of a Latin American tire manufacturing facility.
The quarter also included an after-tax
gain of $4 million on the sale of assets.
Goodyear will hold an investor conference call on Monday, June 21, at 11 a.m. EDT.
Participating in the conference call with Keegan will be Richard Kramer, who recently was named executive vice president and chief financial officer.