“Disappointing” Goodyear Results

Goodyear has published financial results for the fourth quarter of 2000 and for the year as a whole. The net loss for 4Q was $102 m (4Q 1999: +$37 m). The North American replacement market was buoyant, but increasing raw material costs, falling OE sales in the US and the deterioration in the value of the Euro vis-a-vis the Dollar had a negative impact, as did the mild winter in Europe.

Worldwide, Goodyear’s 4Q sales were 3.5 bn, compared with $3.7 bn (4Q 1999).

Dunlop sales contributed $569.7 m in 4Q 2000. For the year 2000, Goodyear’s sales were a record $14.

4 bn (up 7.9 per cent on 1999’s $13.4 bn), of which Dunlop contributed $2.

3 bn (1999: $873.4 m). Goodyear estimates that currency factors reduced sales by $450 m.

There was a sharp fall in net income. The 2000 figure was $40.3 m (without after-tax charges, this would have been $103.

3 m) compared to the 1999 net income of $243.3 m. The number of tyres produced in 2000 was up 11.

4 per cent, or 22.8 m units, to 223.3 m tyres.

Dunlop tyres accounted for 37.3 m units. Below are further details of the different tyre markets.

North American Tire: 2000 sales rose almost 7 per cent to $7,111.3 m (1999: $6,648.6 m).

Volume rose 6.3 per cent to 115.9 m units, due to increased sales resulting from the Firestone recall and the addition of the Dunlop operations.

Dunlop’s sales in this market were 12.3 m units in 2000. European Union Tire: Year-on-year sales were up 21 per cent to $3,198.

1 m (1999: $2,642.7 m). Volume rose 31.

8 per cent to 60.3 m units, due to the additional Dunlop sales, and there was significant growth in both the replacement and OE markets. The fourth quarter was not a success, due to negative currency exchange rates and a mild winter.

Eastern Europe, Africa & Middle East Tire: Sales fell 2.4 per cent to $793.0 m (1999: $812.

9) and, in volume terms, they were down 1.5 per cent to 15.6 m units.

4Q volume rose 8 per cent. Once again, currency exchange rates were unfavourable, plus there was an industry-wide strike in Turkey during the year. Latin American Tire: Sales rose in value by 10.

5 per cent, to $1,047.9 m (1999: $948.1 m).

Volume rose too, by 11 per cent to 19.7 m units for the year and there were increases in both OE and replacement sales. Negative effects came from fierce price competition and rising raw material costs.

Asia Tire: Both sales values and volume fell in this area. Sales value was down 11.5 per cent to $524.

6 m (1999: $593.2) and volumes down 2.1 per cent to 11.

8 m tyres for the year. The sales reflect the exclusion of replacement market sales, which were transferred to the Japanese jv with Sumitomo Rubber Industries. Reacting to the figures, Goodyear chairman and chief executive officer, Samir G.

Gibara, described both 4Q and full year results as “disappointing, especially as much of our difficulty was caused by external factors.” He added: “We have solid improvement plans in place for 2001.” Gibara also referred to the groups global rationalisation programme, which is designed to shed 7,200 jobs worldwide.

This, he said, would reduce costs by $150 m in 2001 and by around $250 m annually, thereafter. “Further savings will come from simplifying our tyre line offerings and the continued integration of our Dunlop operations.” said Gibara.