AKRON, Ohio (April 25, 2001) — Goodyear posted a net loss of $46.7 million in the first quarter vs. net income of $48.2 million in 2000's same period, but said the results showed improved operating performance over the previous quarter.
Among the bright spots, the company said its Goodyear brand gained market share in North America during the period.
The Akron-based tire maker said after-tax rationalization charges of $57.1 million and an after-tax gain of $13.9 million from the sale of land and buildings in the United Kingdom impacted the quarterly results. Excluding these losses and gains, Goodyear posted an after-tax loss from operations of $3.5 million.
Foreign currency fluxuations further reduced operating income by an estimated $20 million.
The company said it expects to realize annual cost savings of about $260 million when the rationalization programs are completed. Approximately $155 million in savings are anticipated during 2001.
The rationalization charges relate to workforce reductions and facility consolidations, the company said. When these are completed, Goodyear anticipates its worldwide employment will shrink by more than 7,800. This is 600 more jobs than the company announced in February. Through the first quarter, Goodyear had slashed its payroll by 2,800 workers.
Worldwide, the company said its first-quarter sales were $3.4 billion vs. $3.7 billion in 2000. Goodyear estimated that currency translation reduced sales by about $130 million. Tire volume during the quarter totaled 52.7 million units worldwide—down 2.1 million or 3.8 percent from 2000, mostly due to weak original equipment in North America, the company said.
In North America, Goodyear said its tire shipments fell 9.6 percent to 28.5 million units compared with the same period last year. Sales to OE customers declined 22.1 percent, while replacement sales volume slipped 2.7 percent.
Chairman and CEO Samir G. Gibara said the continued decline in North American orders for orginial equipment tires and engineered products had a substantial impact on Goodyear's results.
"We significantly reduced our production levels during the quarter, but could not offset the rapid market decline in February and March," he said. "Further reductions in production are being made this quarter to bring inventory levels into line with projected sales by the end of June."
In line with the production cutbacks, Goodyear will layoff a number of employees, a company spokesman said. While he could not provide figures, he said the plants involved are Goodyear facilities in Gadsden, Ala., Union City, Tenn., and Valleyfield, Quebec, Canada, and Kelly-Springfield plants in Fayetteville, N.C., and Tyler, Texas. In February, Goodyear announced production adjustments at plants in Danville, Va., Freeport, Ill., Lawton, Okla., and Napanee, Ontario, Canada, the spokesman said.
While tire shipments slipped industrywide in North America during the quarter, sales of Goodyear-brand tires bucked the trend, the company said.
The company said industry shipments of replacement consumer tires in North America declined about 7 percent during the quarter, whereas Goodyear-brand sales of these tires grew more than 4 percent.
In commercial truck tires, shipments of Goodyear-brand tires improved 7.5 percent vs. the industry, which was down 16 percent. The same trend held true in farm tires, where shipments of Goodyear-brand tires fell only 4 percent, while industrywide shipments of these tires declined 9 percent.
Referring to the negative publicity that followed Bridgestone/Firestone Inc.'s August 2000 recall of 6.5 million Firestone tires, Mr. Gibara said continued market-share improvement for the company's Goodyear brand reflect what he termed "a clear flight to quality on the part of tire consumers."
While competitive pressures continued to exist in several markets, Goodyear said, price increases enacted earlier this year are providing manufacturers with much-needed relief . However, the company noted that raw material costs, which rose an estimated 3 percent in the first quarter, are still climbing.