Goodyear 3Q Results: Net Income Triples

Goodyear has published its results for the third quarter. Net income more than tripled to $33.7 million (3Q 2001: $9.

3 m), while worldwide sales were down slightly at $3.5 bn ($3.7 bn).

Currency movements had an estimated $4 m negative effect on sales and $10 m on earnings. For the first nine months, Goodyear posted a loss of $0.6 million, compared with a loss of $29.

6 m for the same period last year. Sales were down too, at $10.3 bn ($10.

7 bn), while tyre volumes slipped 2.5 per cent to 160.7 million units.

Below are brief details of results in the various business segments, relating to tyres.North American Tire unit volume in 2002’s third quarter (26.5 m units) was down 12.

1 percent from 2001 (30.2 m units) and down 6.9 percent for the first nine months (79.

1 m units in 2001 and 84.9 m units in 2002). It should be remembered that the 2001 3Q figures included substantial sales because of the Ford tyre replacement program, for which Goodyear supplied 3 million tyres during this period.

Excluding the Ford factor shows a decline in tyre volumes of 2.6 p.c.

for 3Q and 2.5 p.c.

for nine months. In unit terms, replacement market sales fell 18.8 p.

c. for the quarter and 13 p.c.

for nine months. OE shipments rose 7.7 p.

c. (3Q) and 8.3 p.

c. (nine months).European Union Tire volumes were up in the quarter (15.

4 m/15.0 m) and down for the first nine months (45.3 m/45.

6 m). A similar story for unit replacement sales: up 2.5 p.

c. (3Q) and down 0.7 p.

c. (9 months). OE sales for both periods were up: 4.

2 p.c. and 3.

7 p.c. respectively.

There were positive impacts on sales from currency movements of $69 m (3Q) and $103 m (9 months). Operating income was boosted by lower raw material costs, currency movements and higher selling prices.Eastern Europe, Africa, Middle East Tire: Replacement unit sales showed double digit increases for both 3Q and 9 months, while shipments to OE customers were down slightly for both periods.

Currency movements, mainly in South Africa, had a negative effect, but the increase in sales figures was as a result of increased replacement volume and better pricing.Latin America Tire: Much of the decrease in sales for the quarter was due to currency movements, notably in Brazil, Argentina, Mexico and Venezuela, but the rise in operating income is a reflection of a number of factors, including lower raw material prices, improved product mix, higher selling prices and the implementation of cost reduction programs.Asia Tire: There were volume increases in both OE and replacement segments and the rise in operating income again shows the benefit of higher prices, lower raw material costs and cost reductions.

Looking at these results, it is evident that Goodyear’s performance outside its home market is more impressive than in the USA. Sam Gibara, Chairman and CEO, admitted this when he said: “Our international business units demonstrate that our initiatives to achieve top line growth and substantial earnings improvement are delivering results. Our focus is now to drive this change throughout North America and regain our momentum in the consumer replacement market.