Goodyear Reports $20 billion Sales, $358 million Net Loss in 2006

Goodyear’s net sales for 2006 were a record $20.3 billion, up 3 per cent despite a 5 per cent decline in tyre unit volume. However strike costs of $367 million meant the company recorded net losses of $330 million, compared to net income of $228 million in 2005. The company estimates that the strike reduced 2006 sales by $363 million, tyre volume by 2.8 million units and net income by $367 million. Tyre unit volume was 51.2 million units in the fourth quarter, compared to 55.7 million units in the 2005 period.

Goodyear put the relatively positive results, considering low US tyre sales, high raw material costs and striking, down to improvements in pricing and product mix of approximately $784 million. For their part raw material costs were said to have increased 17 percent, or approximately $869 million, compared to 2005. Revenue per tyre increased 7 per cent compared to 2005.

“We made outstanding progress in several key focus areas in 2006, in spite of the challenges from the strike, high raw material costs and difficult market dynamics. This allowed us to continue to grow our top line and deliver record results in several of our businesses while creating strong business platforms to carry Goodyear’s profitable growth into the future,” said Robert J. Keegan, chairman and chief executive officer.

“Looking beyond the impact of the strike and our restructuring actions one can see the true performance of our business and the significant strength in the underlying results,” he said. “A series of courageous decisions and successful execution against our plans in 2006 position our company well for earnings growth now, and for cash flow acceleration in 2008 and beyond.”

Improvements in pricing and product mix of approximately $210 million offset raw material cost increases of an estimated $220 million compared to the prior-year quarter. Revenue per tyre increased 5 per cent compared to the fourth quarter of 2005.