Goodyear posts record first quarter sales, improved loss figures

From Rubber & Plastics News

AKRON (June 18) - Goodyear reported record sales in the first quarter of $4.29 billion, as well as improved segment operating income through its business units and increased tire unit volume.

The 21-percent increase from the first quarter in 2003 was based on the stronger volume, higher pricing, a more-favorable product mix and an estimated $200 million positive impact of currency translation, the Akron tire maker said in its June 18 financial results.

The company reported a net loss of $76.9 million in the quarter, but the loss was a marked improvement from the $196.5 million net loss posted in the like period of 2003.

The tire maker had scheduled an investor conference call and had planned to report first-quarter financial results June 16, but both were cancelled principally because the company needed additional time to complete its financial statements.

Segment operating income was $216.1 million in the quarter, up from $42 million in 2003. The operating results were offset by an increase in raw material costs of about $30 million over the first quarter last year, Goodyear said.

Tire unit volume for the quarter was 55.7 million units, a 5.9-percent jump from 2003.

Sales within Goodyear's largest business unit, North American Tire, increased 10.8 percent for the quarter to $1.76 billion. Tire unit volume remained relatively flat at 24.7 million units.

The North American segment posted a $31.7 million operating loss during the period, but the figure was an improvement over the $66.5 million operating loss in 2003's first quarter.

Robert J. Keegan, Goodyear chairman and CEO, credited -- in addition to the volume, pricing and product mix improvements -- the company's cost reduction efforts and the strategies it is implementing to better its business economics.

"While challenges remain, we are pleased with the continuing success of our turnaround strategies and with our progress to date," Keegan said. Those challenges include high debt levels and unfunded pension obligations, which will be addressed via refinancing to lengthen debt maturities, potential asset sales to reduce the obligations and, ultimately, increased equity funding to improve Goodyear's credit profile.