Goodyear Reports Profit in Second Quarter 2010
Goodyear Reports Profit in Second Quarter 2010 on Strong
Sales Growth, Continued Cost
• Sales up 15% from last year on 10% unit growth, improved price/mix
• Tyre sales increase in all 4 business units reflecting global recovery
• Segment Operating Income up $195 million from last year, Net Income up $249 million
• Record Segment Operating Income in Asia Pacific region
• North American Tire’s Segment Operating Income up more than $100 million
• Year-to-date cost savings exceed $280 million
SHANGHAI, China, July 30, 2010 – The Goodyear Tire & Rubber Company today reported improved tyre unit volumes, higher sales and a net profit in the second quarter of 2010.
“We are very pleased with our strong performance in the second quarter and first half of the year,” said Richard J. Kramer, president and chief executive officer. “Our businesses continue to perform better than a year ago as they capture the benefits of recovering industry demand, strong new product performance and solid productivity improvements. We are clearly on the right path as our strategies position us to grow profitably as markets continue to improve.”
Kramer noted that improved results in the company’s North American Tire business unit made a significant contribution to Goodyear’s second quarter success. “These results are further evidence of the effectiveness of our strategy to drive innovation, improved mix and operational efficiency in the business,” he said.
Goodyear’s second quarter 2010 sales were $4.5 billion, up 15 percent from the 2009 quarter. Second quarter sales reflect the $304 million impact of a 10 percent increase in tyre unit volume due to improved global demand. Sales were also positively impacted by $161 million from higher sales in other tyre-related businesses, primarily third-party chemical sales in North America, and by improved price/mix. Unfavorable foreign currency translation reduced sales by $37 million.
The company had segment operating income of $219 million in the second quarter of 2010, up from $24 million in the year-ago quarter. Compared to last year, second quarter segment operating income reflects higher global demand, strong price/mix performance and cost reduction actions.
Improved price/mix of $121 million in 2010’s second quarter more than offset $54 million in net higher raw material costs ($89 million before raw material cost reduction actions). Unfavorable foreign currency translation reduced segment operating income by $14 million.
The 2010 second quarter included charges of $8 million (3 cents per share) due to rationalizations, asset write-offs and accelerated depreciation, and $3 million (1 cent per share) for a one-time importation cost adjustment, and a gain of $8 million (3 cents per share) on asset sales. All amounts are after taxes and minority interest.
Goodyear’s second quarter 2010 net income was $28 million (11 cents per share), compared with a loss of $221 million (92 cents per share) in the 2009 quarter. All per share amounts are diluted.
“Raw material costs remain a challenge and we continue to see an uncertain economy, but we remain focused on the proven strategies that have enabled us to address these headwinds over time,” Kramer said.
Second Quarter Six Months
(in millions) 2010 2009 2010 2009
Tyre Units 5.3 4.8 10.5 8.9
Sales $495 $426 $979 $767
Segment Operating Income 64 57 133 72
Segment Operating Margin 12.9% 13.4% 13.6% 9.4%
Asia Pacific Tire’s
second quarter sales increased 16 percent from last year to
$495 million due to a 9 percent increase in tyre unit volume
with strong replacement market volumes in China and India
and favorable foreign currency translation. Original
equipment unit volume increased
22 percent, resulting from higher vehicle production. Replacement tyre shipments were up
Segment operating income of $64
million increased $7 million over last year and was a second
quarter record. Improved price/mix of $29 million in
2010’s second quarter offset
$28 million in higher raw material costs. The increase in segment operating income was also due to higher volume and actions to reduce costs.
“The second quarter of 2010 confirms Goodyear’s ability to execute its growth strategy in Asia Pacific,” said Pierre E. Cohade, president of Goodyear Asia Pacific. “Our year-over-year improvement reflects our commitment to deliver a vibrant new product engine and strengthen the Goodyear branded distribution network,” he added.
“Goodyear’s latest achievements in China are great proof points - our latest product innovation, Eagle EfficientGrip, was recently crowned ‘Comfort Tyre of the Year 2010’ by Motor Trend and we also launched the industry’s first Goodyear Training Center to enhance the skills and capabilities of our branded retailers,” said Cohade. “Innovations inside and outside of the product stream spell the difference for us with our customers, and I thank all our dedicated associates and business partners for making it happen,” he added.
Goodyear is one of the world’s largest tyre companies. It employs approximately 70,000 people and manufactures its products in 57 facilities in 23 countries around the world. Its two Innovation Centers in Akron, Ohio and Colmar-Berg, Luxembourg strive to develop state-of-the-art products and services that set the technology and performance standard for the industry. For more information about Goodyear, go to www.goodyear.com.
Certain information contained in this press release may constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. There are a variety of factors, many of which are beyond our control, that affect our operations, performance, business strategy and results and could cause our actual results and experience to differ materially from the assumptions, expectations and objectives expressed in any forward-looking statements. These factors include, but are not limited to: our ability to realize anticipated savings and operational benefits from our cost reduction initiatives or to implement successfully other strategic initiatives; increases in the prices paid for raw materials and energy; actions and initiatives taken by both current and potential competitors; deteriorating economic conditions or an inability to access capital markets; pension plan funding obligations; work stoppages, financial difficulties or supply disruptions at our suppliers or customers; a labor strike, work stoppage or other similar event; our failure to comply with a material covenant in our debt obligations; the adequacy of our capital expenditures; potential adverse consequences of litigation involving the company; as well as the effects of more general factors such as changes in general market, economic or political conditions or in legislation, regulation or public policy. Additional factors are discussed in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. In addition, any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.