Goodyear delivers record earnings amid sales decline

Akron, Ohio — Despite a drop in net earnings and sales for the third quarter, Goodyear boosted its segment operating income 21 percent to a record $520 million.

Goodyear’s third-quarter net income slipped 3 percent to $161 million on a 6-percent drop in sales to $4.7 billion for the third quarter, ended Sept. 30, compared with the year-ago period.

“We delivered outstanding earnings growth in the quarter and achieved a segment operating income margin of more than 11 percent, the highest in more than a decade, despite an increasingly challenged global economy,” said Richard Kramer, chairman and CEO.

“These results reflect our focus on capturing the value of our branded products in the marketplace and continued progress generating cost savings through our operational excellence activities.

Sales suffered from $137 million in unfavourable foreign currency translation, Goodyear said. Tire unit volumes totalled 41.9 million for the third quarter of 2014, down 2 percent year-over-year.

OE unit volume was down 3 percent, primarily due to reduced vehicle production in Brazil, the company said.

Replacement tire shipments were down 1 percent, due primarily to a decline in North America where markets were disrupted by significant stockpiling of imported low-end tires in advance of potential tariffs being imposed in 2015.

“In the distorted North American industry environment, we remained committed to our strategy of pursuing profitable volume and we achieved record segment operating income in the quarter,” Kramer said.

Segment operating income for the nine months rose 16.5 percent to a record $1.35 billion, reflecting significant earnings growth in North America and Europe, the Middle East and Africa.

Net earnings fell 18 percent to $323 million and sales dropped 6.6 percent to $13.8 billion despite a 1-percent uptick in unit volume to 122.5 million. Replacement tire shipments edged up 2 percent while OE unit volume fell 3 percent.

In North America, third-quarter sales decreased 5.9 percent to $2.06 billion as unit sales fell 3.8 percent to 15.2 million. Operating income jumped 30.4 percent to a record $210 million; Goodyear attributed the increase primarily to lower conversion and raw material costs.

North America segment operating income jumped 16.7 percent for the nine-month period to $574 million, while sales dropped 8.7 percent to $5.98 billion.

The Asia Pacific segment was the only region that boosted tire unit sales, to 6 million, according to Akron-based Goodyear, however all regions experienced a drop in monetary sales for the quarter.

The company said it now anticipates segment operating income growth for the year to reach near the high end of the 10 percent to 15 percent range. Based on year-to-date performance, the company also expects unit volumes to be flat to up 1 percent for 2014 over 2013.