AKRON (April 21, 2000)—Goodyear is showing some signs of financial improvement, as most of its business segments posted gains in the first quarter, compared with the first three months of 1999.
The tire maker posted net income of $63.6 million—almost 2.5 times greater than a year ago, when the company´s results included after-tax rationalization charges of $116 million related to the alliance with Sumitomo Rubber Industries Ltd.
The quarter´s earnings exceeded analysts´ consensus expectation by almost $8 million, Goodyear said.
Net sales for the period jumped 16.6 percent to $3.54 billion, with the Dunlop operations contributing almost $577 million.
Tire unit sales grew 20 percent to 54.8 million, reflecting the addition of 8.9 million units from Dunlop.
"We´re pleased to see widespread improvement in business fundamentals over 1999´s fourth quarter that confirm our turnaround is on track," Chairman and CEO Samir Gibara said.
Foreign currency exchange losses of $5.1 million reduced first-quarter 2000 earnings, compared with a gain of $34.6 million in the 1999 period. Goodyear attributed these losses primarily to the revaluation of the Brazilian real.
In the North American Tire segment, higher raw materials costs and a "less-favorable" product mix sent operating income plunging 21.9 percent to $71.6 million, despite a 9.7-percent increase in sales to $1.65 billion.
Unit tire sales in North America increased 12.3 percent from 1999, largely due to 2.9 million units sold by the Dunlop business.
At its annual shareholder meeting April 10 in Akron, Chairman Samir Gibara said he expects Goodyear´s net sales to grow to more than $15 billion in 2000 and net income to almost double from the $240 million reached in 1999. The company posted sales of $12.9 billion in 1999.
Mr. Gibara said the tire maker is focusing on turning around its financial performance by concentrating on growth from within—increasing sales, reducing debt and lowering manufacturing costs.
"In North America,|.|.|.|we have returned to very satisfactory fill rates to our customers, while running our plants at full capacity," he said
Goodyear´s alliance with Sumi-tomo Rubber Industries Ltd. is expected to save Goodyear $116 million in 2000—$6 million more than originally targeted, Mr. Gibara said.