Goodyear Reports $5 Billion in Quarterly Sales, Highest in 2 Years

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The Goodyear Tire & Rubber Company today reported third quarter 2010 sales and tire unit volumes that were the highest achieved since the third quarter of 2008.

“We are pleased with our continued strong operating results and made significant progress in all of our strategic focus areas during the third quarter,” said Richard J. Kramer, chairman and chief executive officer.  “We are encouraged by the strength and breadth of the industry recovery.

“The bottom line,” Kramer added, “is that as we look to the future we feel good about the direction of the tire industry, and we feel even better about our direction as a company.”

Goodyear’s third quarter 2010 sales were $5 billion, up 13 percent from the 2009 quarter.  Tire unit volumes totaled 47.7 million, up 6 percent from last year.

Third quarter sales reflect the $211 million impact of the increase in volume.  Sales benefited from price/mix improvements, which drove revenue per tire, excluding the impact of foreign currency translation, up 8 percent over the 2009 quarter despite higher original equipment sales.  Sales were also impacted positively by higher sales in other tire-related businesses, primarily
third-party chemical sales in North America. Unfavorable foreign currency translation reduced sales by $88 million.

“Goodyear’s innovation engine and resulting new products continue to win awards and third-party recognitions that drive differentiation in the marketplace and ultimately translate into consumer demand for our premium branded products,” Kramer said.

During the third quarter, Goodyear’s Assurance Fuel Max tire exceeded three million units sold in North America since its introduction in 2009.  Fuel Max tires were recently introduced in Latin America and Asia Pacific markets.

Goodyear- and Dunlop-brand winter tires 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 tire buying decisions.

The company had segment operating income of $234 million in the third quarter of 2010, down $41 million from the year-ago quarter.  Segment operating income reflected improved price/mix of $252 million and the benefits of higher volume (including unabsorbed overhead recovery) of $125 million, which were more than offset by $381 million in net higher raw material costs ($412 million before raw material cost reduction actions).  Unfavorable foreign currency translation reduced segment operating income by $20 million.

The 2010 third quarter included charges of $56 million (23 cents per share) for cash premiums and write-offs of deferred financing fees related to the early redemption of debt,
$10 million (4 cents per share) due to rationalizations, asset write-offs and accelerated depreciation, $4 million (2 cents per share) related to a supply disruption, and $3 million (1 cent per share) resulting from a strike in South Africa; and gains of $13 million (6 cents per share) due to tax benefits, and $8 million (3 cents per share) on an insurance recovery.  All amounts are after taxes and minority interest.

Goodyear’s third quarter 2010 net loss was $20 million (8 cents per share), compared with net income of $72 million (30 cents per share) in the 2009 quarter.  All per share amounts are diluted.

Asia Pacific Tire

Asia Pacific Tire’s third quarter sales increased 14 percent from last year to $521 million, which were the highest ever achieved in any quarter.  Sales reflect an 8 percent increase in tire unit volume.  Original equipment unit volume increased 15 percent.  Replacement tire shipments were up 3 percent.  Favorable foreign currency translation increased sales by $30 million.

Segment operating income of $57 million was $11 million lower than last year.  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.

“Goodyear in Asia continues to ride on a strong momentum fueled by our innovation strategy and market execution,” said Pierre E. Cohade, president of Goodyear Asia Pacific.  “The continuous growth that we have been experiencing over the last nine months of 2010, particularly in China and India, is reflective of the clear focus we have given on driving new best-in-class products while strengthening our base of Goodyear branded stores across the region,” he said.

“The successful launch of Assurance Fuel Max combined with the third party accolades that we have received for Eagle EfficientGrip in China and our farm tires in India are recent examples of how committed we are in delivering relevant innovations into the marketplace,” said Cohade. “Our product innovations and the people who make and sell them make the difference, and I thank all our hardworking associates and business partners for what we have achieved.”