Akron, Ohio -- Weak demand in the North American consumer
replacement market kept a lid on GoodyearÂ´s sales in the second quarter
as charges relating to cost-cutting moves cut drastically into the tyre
GoodyearÂ´s sales rose 3 percent to $5.14
billion from $4.99 billion the prior year. Net income fell drastically
to $2 million from $69 million a year ago. Profits were affected
negatively by rationalisation and depreciation costs of about $63
million related to plant closings in the United Kingdom and New
Tyre unit volume in the quarter fell 4.3
percent to 54 million units from 56.4 million units a year ago. Raw
material costs also dampened results, with an increase in the quarter
of 16 percent.
Total segment operating income fell 15.5
percent to $267 million from $316 million in 2005. North American Tire
took a substantial hit as its segment operating income fell almost 90
percent to $6 million from $55 million a year ago. Tyre unit volume
fell 7.9 percent in the North American business for the quarter to 23.3
Sales in the unit rose 1.9 percent to $2.34 billion and revenue per tyre rose 9 percent in the segment and 7 percent overall.
Goodyear said the unitÂ´s profitability was
impacted negatively by lower volume, price mix that was unable to
offset raw material costs, the loss of profits from divested businesses
and higher costs in general.
"Our strategy to focus on high-value-added
products and key market segments resulted in market share gains for our
Goodyear and Dunlop brands during the quarter," Chairman and CEO Robert
Keegan said in a statement. "However, we were not able to offset the
impact of weakness in the lower-value segments of the North American
consumer replacement tire market."
For the first half of the year, GoodyearÂ´s
sales rose 2.4 percent to $10 billion from $9.76 billion last year. Net
income fell 44.5 percent to $76 million from $137 million.
North American TireÂ´s sales rose 3.3
percent to $4.58 billion as tyre unit volume slipped 7.3 percent to
46.9 million units in the half. Segment operating income for the half
fell 25.8 percent to $49 million.