Goodyear Tire & Rubber reports big increase in third-quarter earnings

ERJ staff report (CCB)

Cleveland, Ohio – Goodyear Tire & Rubber Co. has reported a big increase in third-quarter earnings despite lower sales, as its cost of goods sold also declined, Crain’s Cleveland Business reported.

The tire maker said its net income in the period rose 51 percent, to $166m (€122m), or 62 cents per diluted share, from $110m (€81m), or 41 cents a share, in the third quarter of 2012.

Sales at Goodyear declined 5 percent, to $5.0 billion (€3.7 billion) from $5.26 billion (€3.9 billion). However, the company's cost of goods sold fell even more, decreasing 8.5 percent to $3.95 billion (€2.90 billion) from $4.32 billion (€3.17 billion).

Goodyear said all four of its regional businesses achieved higher operating income in the quarter compared to the year-ago period, with North America posting record third-quarter operating income. Three businesses posted higher tire unit volumes than last year.

“We now expect to see record segment operating income of more than $1.5 billion (€1.1 billion) in 2013, and continue to target 10 percent to 15 percent annual growth in segment operating income through 2016,” Richard Kramer, Goodyear chairman and CEO, said in a statement. “As previously announced, we will take the first steps in our capital allocation plan in the fourth quarter with our reinstated quarterly dividend. Additionally, the company continues to target positive cash flow, excluding pension pre-funding, through 2016.”

For the full year of 2013 in North America, Goodyear's industry outlook is unchanged. The company expects consumer replacement as well as commercial replacement and commercial original equipment volumes to be at essentially 2012 levels. It expects consumer original equipment volumes to be up approximately 5 percent.

For the full year in Europe, Middle East and Africa, Goodyear's industry outlook is unchanged, except for consumer original equipment. The company now expects consumer original equipment volumes to be flat to down 5 percent. It expects consumer replacement to be essentially at 2012 levels. It expects commercial original equipment volumes to be flat to up 5 percent and commercial replacement to be up about 5 percent.