Favourable price/mix sends Goodyear revenue per tyre up 16%

ERJ staff report (LMH)

Akron, Ohio -- Goodyear Tyre & Rubber Co. has reported first quarter 2012 sales of $5.5 billion (Euro 4.2 billion), up 2 percent year-on-year. The company said that price/mix drove first quarter revenue per tyre up 16 percent over last year.

Tyre unit volumes totalled 43 million, down 8 percent from 2011, reflecting weak industry demand in many markets, Goodyear said. This compares to first quarter 2011 volumes that were up almost 7 percent from 2010.

"I'm pleased with our results as our businesses posted solid operating income," said Richard Kramer, Goodyear CEO. "Our teams delivered these results in the face of a difficult volume environment and high raw material costs, with a strong focus on price/mix.

The company had operating income of $292 million in Q1 2012, down $35 million from Q1 2011. The operating income was negatively impacted by inefficiencies related to a plant closing in North America and poor productivity at factories in France, which more than offset the benefit of cost saving programs.

In the North American tyre business, tyre units were down but operating income doubled to $80 million, with an operating margin of 3.2 percent, up from 1.7 percent in Q1 2011. Original equipment unit volume increased 11 percent. Replacement tyre shipments were down 14 percent, reflecting weak industry demand and strong sales growth for Goodyear in the year-ago quarter.

In Europe, Middle East and Africa, first quarter sales decreased by 1 percent to £1.9 billion. Original equipment unit volume was flat. Replacement tyre shipments were down 11 percent, reflecting lower industry demand. Operating income was down to $90 million from $153 million in the first quarter of 2011. Kramer attributed this to “weak economic conditions, which remain uncertain, and warm winter weather.”

In the Latin American business, sales decreased by 11 percent to $521 million. Original equipment unit volume decreased 11 percent. Replacement tyre shipments were down 12 percent. The decrease in volume was primarily due to weaker industry demand and increased competition, Goodyear said. Operating income was down $12 million at $55 million.

In Asia Pacific, sales increased 5 percent from last year to $577 million, a first quarter record. Original equipment unit volume was up 7 percent. Replacement tyre shipments were down 11 percent. First quarter operating income of $67 million was even with last year.

"Our first quarter results demonstrated a consistent focus on our global strategy roadmap," Kramer added. "We have positive momentum and I remain confident that we will reach our 2013 targets."

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Press release from Goodyear