Goodyear has record $5 billion sales, doubles income in Q2

By Liz White, ERJ staff

Akron, Ohio-Goodyear Tire & Rubber Co.'s net income for the second quarter of 2005 was $69 million "reflecting record sales and increased unit volume," said the Akron-based tyre maker. This compares with net income of $30 million for Q2 2004, the company said, in its Q2 2005 earnings release.

Strategic pricing actions and better product mix allowed the tyre maker to offset record raw materials price rises during Q2, rises which seem set to continue this year, Goodyear indicated.

The group's record $5000 million sales represent a 10 percent increase over Q2 2004, Goodyear said. According to the company, this increase was due to "improved pricing, product mix and volume, as well as the favourable impact of currency translation."

Tyre unit volume in the second quarter of 2005 was 56.4 million units, a rise of 1.4 million over Q2 2004, driven, said Goodyear, "by gains in the European, Latin American and Asia/Pacific markets."

"Five of our businesses had record second quarter sales, and margins improved in our North American and European Union tyre businesses," said Robert Keegan, Goodyear chairman and chief executive officer. "This success is further evidence that our strategies are working, and that our unwavering focus on key products, customers and markets is paying off. We continue to gain share in targeted markets," he added.

In terms of pricing for tyre materials, the Goodyear chief commented: "We have been successful in offsetting the impact of record high raw material costs through strategic pricing actions and by driving product mix enhancement."

Keegan added that Goodyear, will continue this strategy to deal with what he called "the inevitable raw material cost increases that we expect in the second half of 2005."

Goodyear said it suffered raw material costs rises of about $133 million in Q2 3005, compared to Q2 2004 and expects another 10 percent for the full year, compared to 2004.

The company estimates that currency translation raised 2005 Q2 sales by about $108 million.

Tyre sales in the EU of 25.3 million units were a second quarter record and a rise of 11 percent over Q2 2004, while operating income increased 49 percent as a result of better pricing and product mix. This offset a raw material price rise of $11 million compared to Q2 2004.

In North America, operating income of $316 million was 24 percent higher than Q2 2004, with all Goodyear's tyre businesses reporting higher operating income. North American tyre sales reached a record, rising 6 percent over Q2 2004 as a result of improved pricing and product mix, higher volume in the consumer replacement and commercial original equipment markets.

But, Goodyear said, these increases were offset by an 8 percent decrease in shipments to consumer OE customers, "reflecting a slowdown in the US automotive industry and Goodyear's selective fitment strategy in this market."

Operating income in the region increased 34 percent, some of this attributed to "lower manufacturing costs and improved earnings from external chemical and other tyre related businesses, partially offset by higher raw material costs of approximately $75 million," Goodyear's results statement said.

In Asia/Pacific, Goodyear's tyre sales were a record, 12 percent higher than Q2 004 quarter as a result of favorable currency translation of $21 million, and higher volumes, particularly in OE markets.

In its Engineered Products division, Q2 sales were again a record, rising 16 percent above those in Q2 2004. Goodyear said this was a result of higher volume, mainly in the industrial business, and currency translation effects of about $11 million.