Goodyear reports net loss in 2010 and final quarter

ERJ staff report (DS)

Akron, Ohio -- Goodyear's annual sales for 2010 were $18.8 billion, up 16 percent from $16.3 billion in the 2009 period. However, the company reported a net loss in both the full year and the final three months. The company reported a pre-tax loss in the final quarter and barely broke even in the full year, reporting a pre-tax profit of just $8 million on sales of $18,832 million for the full 12-month period.

The full-year net loss of $216 million was slightly better than 2009's net loss of $375 million. Almost all the 2010 loss came in the final quarter, when Goodyear reported a net loss of $177 million, compared with a net profit of $107 million a year earlier. The 2010 fourth quarter included total charges of $213 million due to rationalisations, asset write-offs and accelerated depreciation, due to the financial crisis in Venezuela.

“I'm very pleased with Goodyear's performance in the fourth quarter and the full year of 2010," said Richard Kramer, chairman and chief executive officer.

Sales reflect the $1 billion impact of an 8 percent improvement in tyre unit volume as well as a $582 million increase in sales in other tyre-related businesses, primarily third-party chemical sales by North American Tire. Sales also reflect price/mix improvements and unfavourable currency translation. Revenue per tyre, excluding the impact of foreign currency translation, increased 6 percent over 2009. The overall increase in selling prices just about offset increased raw material costs.

By segment, North American Tire reported an operating profit, but at a margin of just 0.5 percent on sales of $2201 million. The figure for the 12 months was even worse, at an operating profit of $18 million on full year sales of $8205 million -- a margin of just 0.2 percent.

European sales were less bad, but still not good by industry standards. Sales in the full year amounted to $6407 million and the company reported operating profit of $319 million -- a margin of 5.0 percent. Overall Goodyear said unit sales were up by 9 percent on the previous year. With sales up by only 11 percent, it appears Goodyear was unable to increase prices sufficiently to compensate for the increase in raw material prices. The comapny said raw material costs increased $158 million over last year. Operating margins declined in the final quarter when sales were ahead of last year, but operating margins slipped to 3.5 percent.

Margins in Latin America were much more healthy, almost unchanged from 2009 at over 15 percent. Sales in the full year amounted to $2158 million and profits reached $330 million for an operating margin of 15.3 percent, This increased in the final quarter to a margin of 16 percent.

In Asia-Pacific, margins were healthy as volume grew strongy. Full-year sales in the region grew to $2062 millino from $1709 million and volumes grew to 21.4 million units from 19.2 million a year previously. This momentum continued into the fourth quarter.

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Press release from Goodyear