Goodyear posts "record” annual results

Akron, Ohio – Goodyear reported record fourth quarter and yearly results, including an 18-percent increase in full year segment operating income that exceeded $2 billion (€1.77 billion) for the first time in the company’s 117-year history.

In North America, the tire maker’s fourth-quarter operating earnings grew 16 percent, despite a 9.2-percent decline in sales to $1.9 billion.

The sales decrease reflected a 4-percent decline in tire unit volume primarily due to the sale of some assets of the former Goodyear Dunlop Tires North America Ltd. venture with Sumitomo Rubber Industries Ltd., the tire maker said.

Replacement and OE tire unit volume in the quarter fell by 1 percent and 8 percent, respectively, Goodyear said.

Goodyear and Sumitomo dissolved their 16-year global business alliance in the fourth quarter, with both companies looking at the change as an opportunity to foster growth in the regions where the alliance held sway.

For the full year, Goodyear reported $16.4 billion in sales down 9.3 percent from $18.1 billion a year ago.

kramer-goodyear-mexico“Our record results reflect strong demand for our high-value-added Goodyear-brand tires and our focus on capturing the value of these products in the marketplace,” said Chairman and CEO Richard Kramer.

“While economic uncertainty in the global environment will persist in 2016, we remain committed to our target of 10- to 15-percent growth in segment operation income from our ongoing operations.”

Impacting sales in the fourth quarter and year was a one-time $646 million charge on the deconsolidation of the company’s Venezuelan subsidiary.

Following this change, Goodyear said it is targeting record segment operating of $2.1 billion to $2.2 billion for 2016.

Net income for the year was $308 million, compared with $2.45 billion in 2014, the latter of which was enhanced by the release of a $2.2 billion U.S. tax allowance, a one-time, non-cash benefit to earnings. As a result, Goodyear does not expect to pay cash taxes in the U.S. for approximately five years, the company said in its 2014 year-end earnings report.

For the year, Goodyear reported a 3-percent increase in tire unit volumes, in part due to the acquisition of Nippon Goodyear – formerly part of the Sumitomo alliance – in Japan. Replacement tire shipments grew 2 percent, while OE unit volume was up 3 percent.

The growth in segment operating income reflected a favourable price/mix net of raw materials and higher volume, partially offset by cost inflation and unfavourable currency translation, the company said.

In North America, Goodyear’s yearly sales fell 3.8 percent to $7.8 billion, while segment operating income improved by the same percent to $1.1 billion. This represents a full-year operating margin of 14.3 percent.

Fourth quarter segment operating income increased to $266 million from $229 million in 2014’s same period, resulting in a 13.9-percent operating margin.

The sale of Goodyear Dunlop Tires North America negatively impacted North American volumes by approximately 400,000 units, sales by $61 million and segment operating income by $10 million, Goodyear said.

Elsewhere in the world, Goodyear achieved 20-percent growth and record fourth-quarter earnings in its Asia Pacific region, as full-year earnings for the region grew 6 percent.

Earnings in Europe, Middle East and Africa recovered in the quarter despite a challenging environment, the company said.

Goodyear also announced it increased its share repurchase authorization by $650 million to $1.1 billion.