UPDATE: Goodyear Sees Q3 Profits Fall

Despite making a significant operating loss of $19 million in the North American market – as reported on Tyrepress.com on 3 November – Goodyear has carded record sales in 2008’s third quarter, up 2 per cent to $5.2 billion. In addition, the company states that its revenue per tyre is up 8 per cent over Q3 2007 excluding the impact of foreign currency translation, a gain that reflects worldwide gains in pricing and product mix generated by the company’s strategy to focus on high-value-added tyres.

Chairman and CEO Robert J. Keegan said that the company’s “solid third quarter concludes a strong nine months of performance, reflecting the successful execution of our business strategies and continued strength in our international businesses.”

Third quarter 2008 income from continuing operations was $31 million (13 cents per share). This compares to $159 million (67 cents per share) last year. Goodyear had net income of $668 million ($2.75 per share) in the 2007 third quarter, including a gain of $517 million ($2.12 per share) on the sale of its former Engineered Products business. All per share amounts are diluted.

The 2008 quarter was affected by net rationalisation charges and accelerated depreciation of $46 million (19 cents per share), a loss on settlement of postretirement healthcare obligations in connection with the establishment of a Voluntary Employees’ Beneficiary Association (VEBA) of $13 million (5 cents per share), expenses related to Hurricanes Gustav and Ike of $7 million (3 cents per share), discrete net tax charges related primarily to German operations of $6 million (2 cents per share), charges related to the exit of its Moroccan business of $5 million (2 cents per share) and a gain on asset sales of $2 million (1 cent per share). All amounts are after taxes and minority interest.

The 2007 quarter was affected by net rationalization charges and accelerated depreciation of $6 million (2 cents per share), tax expense related primarily to a German tax law change of $12 million (5 cents per share) and a gain on asset sales of $10 million (4 cents per share). All amounts are after taxes and minority interest.

In contrast with North American figures, Europe, Middle East and Africa Tyre third quarter sales increased 4 per cent over last year as a result of improved pricing and product mix and the favorable impact of currency translation, which more than offset lower volume, particularly in the consumer replacement market. Sales in the 2008 third quarter were positively impacted by market share gains for Goodyear- and Dunlop-branded consumer replacement tyres.

Third quarter segment operating income decreased $42 million from 2007 due to lower production levels, which resulted in unabsorbed overhead. Pricing and product mix improvements of $71 million more than offset $59 million in higher raw material costs.