Goodyear Achieves Record Sales in Third Quarter

The Goodyear Tire & Rubber Company today reported third quarter sales of $5.3 billion, a record for any quarter and a 6 per cent improvement compared to the year-ago period excluding the impact of businesses divested in 2005, and despite the strategic decision to exit certain segments of the private label tyre business in North America.

Third quarter 2006 sales were driven by improved pricing and product mix, particularly in North American Tire, and the favourable impact of currency translation, estimated at $77 million. All five of the company’s tyre businesses achieved sales that were a record for any quarter.

European Union Tire’s sales were a record for any quarter and 12 per cent higher than in the 2005 quarter, due primarily to improved pricing and product mix, the impact of foreign currency translation, estimated at $61 million, and higher volume.

Tyre unit volume totalled 55.8 million units in the quarter, compared to 58.4 million units in the 2005 period. This 4 per cent decrease was in part a result of the company’s move to exit certain segments of the private label tyre business in North America. Revenue per tyre increased 8 per cent compared to the third quarter of 2005.

The company reported a net loss of $48 million, including $126 million in after-tax restructuring charges, during the 2006 third quarter. Of those charges, $107 million is reportedly related to the previously announced plan to close the Tyler, Texas, tyre plant. The results also reflect higher raw material costs of $249 million, offset partially by $225 million of
improved price/mix, and lower tyre volume.

“Despite ongoing market weakness in North America and record high raw material costs, we continue to demonstrate the strength of our business model changes and successful product portfolio,” said chairman and chief executive Officer Robert J. Keegan.

“After a challenging first half, our European Union business achieved year-over-year improvements in sales, units and segment operating income. Our key business strategies are also continuing to drive excellent results in the Asia Pacific, Latin America and Eastern Europe, Middle East and Africa tyre businesses,” he said.

“Although we are in the midst of a strike by the United Steelworkers in North America, we continue to work hard for a contract that is fair to all stakeholders and puts Goodyear on a level playing field with our competitors,” Keegan said. “In the meantime, we are executing on our contingency plans to continue providing our customers with outstanding value, products and services.”

Net income for the first nine months of 2006 was $28 million compared to net income of $279 million during the year-ago period. Sales for the first nine months of 2006 were a record $15.3 billion, an increase of 3 per cent from $14.8 billion in the 2005 period. Tyre unit volume was 163.8 million units, a decrease of 4 per cent from a year ago.