Europe helps Goodyear to record earnings
ERJ staff report (TP)
Akron, Ohio – More-than-double earnings in Europe, Middle East and Africa (EMEA) were among the highlights for Goodyear Tire & Rubber Co. as it reported record earnings for the second quarter of 2014.
Q2 2014 sales were $4.7 billion (€3.5bn), compared to $4.9 billion a year ago. Tire unit volumes totalled 40.6 million for Q2 2014, up 3 percent from 2013.
Replacement tire shipments were up 6 percent with growth in all four regions. Original equipment unit volume, however, was down 4 percent, primarily due to declines in Latin America.
The company reported record segment operating income of $460 million in the second quarter of 2014, which was up 7 percent from the year-ago quarter.
The gains were driven by “significant improvement” in EMEA, where operating income reached $117 million, compared to $51 million in the second quarter of last year. This, said Goodyear, more than offset softness in emerging markets.
Goodyear added that its North American business had continued to perform at record levels with segment operating margin of more than 10 percent.
“We delivered record second quarter results, driven by strong consumer replacement volumes in all of our regions where our new products are in demand,” said Richard Kramer, chairman and chief executive officer.
“Our performance in the first half, which was achieved through a balance of volume growth and cost reduction, gives us confidence that our strategy is working and we are on track to attain our 2014-2016 financial targets.”
Sales for the first six months of 2014 were $9.1 billion, down 6 percent from the 2013 period. Tire unit volumes totalled 80.6 million for the first half of 2014, up 2 percent from 2013. Replacement tire shipments were up 4 percent. Original equipment unit volume was down 3 percent.
The company’s first half segment operating income of $833 million was up 14 percent from last year and a record. Compared to the prior year, year-to-date segment operating income reflects volume and earnings growth in North America and Europe, Middle East and Africa, which offset lower earnings in emerging markets.
Goodyear set out its 2014-2016 financial targets, which include: segment operating income growth of between 10 and 15 percent per year; annual positive free cash flow from operations; and adjusted debt to EBITDAP ratio of 2.0x to 2.1x.
The company also continues to expect a 2 to 3 percent increase in unit volumes for 2014 over 2013.
More details can be found in the press release.