Commercial Business Retail Suppliers Wholesale Distribution

New products, Asian markets boost Goodyear

Order Reprints

"We made the right decision late in 2008 to launch a record 62 new products in 2009 despite poor industry conditions. Others may have made a different decision," said Robert Keegan, Goodyear Tire & Rubber Co. chairman and CEO during a news conference to discuss the company's fourth quarter and full-year 2009 financial results.

He pointed to the Goodyear Assurance Fuel Max tire in North America as "the prime example of an impactful new product launch."

The tire was the most successful high value-added new product launch in the history of the company, taking just seven months to sell more than one million tires, said Keegan. To date, the company has sold two million of the tires.

The reason for the succes is the company was right on target with innovative features and mid-tier pricing, he noted. "With fuel-efficient tires, we have created a major new growth generator for our company and for our customers. My comment to our customers has been consistent and clear. Don't underestimate the market's appetitie for fuel-efficient tires. It is likely to exceed all our expectations, he said.

The company's operating segments reported results as follows:

* Goodyear's North American Tire‘s fourth quarter 2009 sales decreased 3% from last year to $1.9 billion, reflecting lower sales in other tire-related businesses of $61 million, primarily third-party chemical sales, and reduced original equipment demand, the company said. Original equipment unit volume declined 7%. Replacement tire shipments were up 2%. Market share gains were recorded in the consumer and commercial replacement product segments.

Despite lower sales, the fourth quarter 2009 segment operating loss of $27 million was a $166 million improvement over the prior year. The 2009 quarter benefited from lower raw material costs of $151 million, productivity improvements and actions to reduce costs. Increased pension expense negatively impacted the operating loss.

Results improved versus expectations as a result of a combination of operating improvements and the timing of costs and volumes.

* Europe, Middle East and Africa Tire‘s fourth quarter sales increased 11% from last year to $1.6 billion primarily due to favorable foreign currency translation of $159 million and higher tire unit volume, which reflected improved demand, especially for winter tires. Original equipment unit volume increased 15%. Replacement tire shipments were up 5%.

Fourth quarter 2009 segment operating income of $125 million was a $157 million improvement over the prior year. It was positively impacted by $133 million in lower raw material costs, higher sales, productivity improvements, actions to reduce costs and foreign currency translation.

* Latin American Tire‘s fourth quarter sales increased 25% from last year to $508 million primarily due to higher tire unit volume, reflecting improved demand, and favorable foreign currency translation of $72 million. Original equipment unit volume increased 39%. Replacement tire shipments were up 26%.

Fourth quarter segment operating income was $81 million, up 65% from the 2008 quarter, reflecting $37 million in lower raw material costs, higher sales and productivity improvements.

* Asia Pacific Tire‘s fourth quarter sales increased 28% from last year to $486 million due to favorable foreign currency translation of $71 million and higher tire unit volume, reflecting improved demand. Original equipment unit volume increased 36%. Replacement tire shipments were up 11%.

Fourth quarter segment operating income of $70 million increased $53 million over last year and was a record for any quarter. This was due to $37 million in lower raw material costs, higher sales, productivity improvements, actions to reduce costs and foreign currency translation.

(See related item, "Goodyear posts profit in 4Q, loss for year.")

"Revenue in each segment came in ahead of our expectations," says Saul Ludwig, managing director of KeyBanc Capital Markets.

Related Articles

New GT Radial Adventuro ATX Debuts

Dill Revamps Digital Inflator Tool

Goodyear Enters the Brake Market

You must login or register in order to post a comment.