Goodyear EMEA Sales Remain High, Q3 Operating Income Down on 2009
Goodyear’s Europe, Middle East and Africa third quarter sales increased 7 per cent from last year on top of a “strong price/mix performance” to $1.7 billion despite being hit by $0.1 billion in unfavourable forex translation, making them the highest since the third quarter of 2008. The company continues to post improved figures for the year to date, with sales up to $4.68 billion in the first nine months (from $4.24 billion in 2009), yielding an operating income of $259 million – way up on last year’s $41 million.
Operating margin in the segment is up to 5.5 per cent from 1.0 per cent in 2009. However in the third quarter in isolation operating income and margin are down to $77 million and 4.5 per cent respectively, from Q3 2009’s $106 million and 6.7 per cent. Original equipment unit volume increased 11 per cent, while replacement tyre shipments were up 6 per cent, adds Goodyear.
Goodyear explains the 2010 quarter was positively impacted by $60 million in improved price/mix, higher volume, increased production levels and actions to reduce costs. Raw material costs increased $154 million over last year.
The company also said that it expects increased winter tyre activity in Europe: “Goodyear- and Dunlop-brand winter tyres excelled in recent winter tire tests in Europe, including taking four of the top five spots in testing by Germany’s highly respected ADAC motor club. These independent tests are important factors in European motorists’ winter tyre buying decisions.
Goodyear Latin, Asia Pacific Sales Up, Income Down
Like its North American and EMEA segment results, Goodyear’s Latin American and Asia Pasific third quarter sales increased (17 per cent to $569 million and 14 per cent from last year to $521 million respectively). The Asia Pacific quarter’s sales are the highest ever achieved in any quarter by the segment. However, both saw operating income decrease by $4 million to $95 million in Latin America and by $11 million to $57 million in Asia Pacific.
Latin American sales reflect a 4 per cent increase in tyre unit volume and strong price/mix performance, says Goodyear. Original equipment unit volume increased 11 per cent, with replacement shipments up 1 per cent. Unfavourable foreign currency translation reduced sales by $26 million, driven by the currency devaluation in Venezuela. The segment’s operating income reflects strong volume and price/mix in Brazil and other markets outside of Venezuela, though these were offset by a $24 million decline related to events in Venezuela, including the currency devaluation.
Asia Pacific’s Q3 sales “reflect an 8 per cent increase in tyre unit volume. Original equipment unit volume increased 15 per cent. Replacement tyre shipments were up 3 per cent. Favourable foreign currency translation increased sales by $30 million… The 2010 quarter was positively impacted by $23 million in improved price/mix and higher volume. Raw material costs increased $35 million over last year.”
North America Increases Q3 Operating Margin to 0.2% from 0.1%
Finally, Goodyear’s largest single segment in North American saw Q3 2010 sales increase 17 per cent from 2009 to $2.2 billion; the highest since the third quarter of 2008. Operating margin crept up slightly to 0.2 per cent, versus 0.1 per cent in Q3 2009.
There was a 5 per cent increase in tyre unit volume, improved price/mix and branded share gains in the consumer replacement business, says Goodyear. Original equipment unit volume increased 12 per cent. Replacement shipments were up 3 per cent. Third quarter revenue per tyre, excluding the impact of foreign currency translation, increased 7 percent in 2010 compared to 2009. Sales were positively impacted by $143 million from higher sales in other tire-related businesses, primarily third-party chemical sales, explains Goodyear.
Goodyear’s statement continues: “Third quarter 2010 segment operating income of $5 million was a $3 million improvement over the prior year. The 2010 quarter benefited from $96 million in improved price/mix, higher volume, increased production levels, decreased pension expense and actions to reduce costs. These were nearly offset by $148 million of higher raw material costs.”
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