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Goodyear’s earnings hit record in quarter

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AKRON (July 30, 2014) — Goodyear has posted relatively strong results in the second quarter, paced by the firm’s Europe, Middle East and Africa business unit and its North American operation.

The Akron-based tire maker’s 2014 second quarter net income was a record $213 million, up from $181 million in the 2013 period. Sales for the quarter slipped to $4.7 billion from $4.9 billion.

The company’s quarterly results were driven by strong consumer replacement volumes in the four regions it serves, Chairman and CEO Richard J. Kramer said. Tire volumes for the quarter totaled 40.6 million, up 3 percent from last year as replacement tire shipments in all regions grew by 6 percent. Original equipment unit volume fell 4 percent, primarily in Latin America, the firm said.

Segment operating income came in at $460 million in the period, up 7 percent from the same quarter last year—principally because of improvement in the Europe, Middle East and Africa region. That offset some softness in emerging markets.

The company’s North American business unit’s sales fell 7 percent to $2 billion, while its segment operating income was $208 million, a 2-percent improvement over last year. The company said the North American unit continued to perform at record levels, with a segment operating margin of more than 10 percent.

Goodyear’s Europe, Middle East and Africa business, with a segment operating margin of 7.4 percent, posted sales of $1.6 billion, a $3 million increase over revenues recorded in the 2013 quarter, and segment operating income of $117, about $66 million above last year’s results.

The Latin America unit’s operating income was $59 million, down 28 percent from a year ago. Sales decreased 8 percent from the previous year to $489 million. Goodyear cited continuing challenges in the operating environment in Venezuela, inflationary cost increases, lower original equipment volume and plant expansion costs in Brazil for the downturn.

Goodyear’s Asia Pacific business unit’s sales fell 7 percent to $543 million, while segment operating income was down 17 percent to $76 million, driven by weak demand for OTR tires and unfavorable foreign currency translation, the company said.

Overall, second quarter tire volumes increased 3 percent over last year, which Goodyear said is in line with its full year outlook.

For the first six months of 2014, Goodyear recorded net income of $155 million, down from $206 million in the first half of 2013. Sales fell 6 percent to $9.1 billion while tire volumes totaled 80.6 million.

Segment operating income for the first half totaled $833 million, about 14 percent above 2013.That was principally driven by earnings growth in the North American and the Europe, Middle East and Africa business units, according to the company.

“Our performance in the first half, which was achieved through a balance of volume growth and cost reduction, gives us confidence that our strategy is working, and we are on track to attain our 2014-16 financial targets,” Mr. Kramer said.

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