Goodyear posts record earnings but decreased sales for 2014

Akron, Ohio – Goodyear’s sales fell 7.2 percent for 2014 and 8.3 percent for the fourth quarter, the company said as it released its financials for the year on 17 Feb.

The Akron-based tire maker reported sales of $18.1 billion (€15.9 billion) for 2014 on unit volumes of 162 million. Replacement shipments increased 1 percent while original equipment volume declined 3 percent.

For the fourth quarter, Goodyear reported sales of $4.4 billion on unit volumes of 39.5 million. OE unit volume was down 1 percent, primarily due to continued industry weakness in Latin America. Replacement tire shipments were down 4 percent due to lower sales of winter tires in Europe resulting from one of the warmest winters on record.

Net income was reported at $2.52 billion for 2014, including an increase to $2.12 billion in the fourth quarter compared to $256 million in 2013. This includes $2.01 billion in what it labelled as “discrete tax benefits,” including a $1.97 billion provision for deferred income taxes.

Adjusted net income for the quarter declined compared to 2013, to $166 million from $209 million. However, the firm’s adjusted net income for 2014 increased to $790 million compared to $725 million in 2013.

Goodyear said its tax valuation allowance represents a one-time, non-cash benefit to earnings in 2014. The company will record charges for income taxes in future periods, but it does not expect to pay cash taxes in the US for approximately five years.

“The release of our $2.2 billion US tax valuation allowance after 12 years is a major milestone for Goodyear,” said Richard Kramer, Goodyear chairman and CEO. “It marks the completion of the successful turnaround of our North America business.”

Goodyear’s Europe, Middle East and Africa segment’s sales dropped to $1.31 billion from $1.63 billion on declining unit volumes of 12.8 million for the quarter. In 2014, sales and unit volumes also declined to $6.18 billion on 60.5 million units.

North American sales fell 6.9 percent to $8.09 billion for 2014. Unit volumes declined 1 percent to 61.1 million. Sales in the region also declined for the fourth quarter to $2.11 billion on 16 million units.

Goodyear’s Latin America segment reported mixed results with increased unit volumes to 4.7 million for the quarter, but sales dropped to $434 million. For 2014, unit volumes and sales decreased to 17.4 million and $1.8 billion.

The Asia segment had similar results as its Latin America segment. Its fourth quarter unit volumes increased to 6 million for the quarter and 23 million for the year, but sales declined to $511 million and $2.08 billion.

The firm said it reported record operating income for 2014 and is on target to exceed the figure by 10 to 15 percent in 2015, reporting an 8 percent increase over 2013 to $1.7 billion thanks to lower raw materials and conversion costs, partially offset by lower price/mix and unfavorable foreign currency translation.

“We delivered record full-year segment operating income, successfully navigating a challenging global economic environment,” Kramer said. “While industry conditions led to mixed results globally, we achieved record fourth quarter segment operating income in North America as well as in Asia Pacific. Our continued performance validates the successful execution of our strategy.”