AKRON (July 23, 2001)—Goodyear reported net earnings or $7.8 million for the second quarter, down nearly 90 percent from the second quarter a year ago, but a marked recovery from a $46.7 million loss in the first quarter of 2001.
To compensate for lower demand, Goodyear reduced production around the world by 6 million units, compared with the 2000 quarter, and further curtailments will take place in the third quarter, according to Goodyear Chairman and CEO Samir Gibara. The majority of the cutbacks will take place in North America and Europe.
Mr. Gibara blamed the “ongoing slowdown in the auto and commercial truck industries around the globe” for the company's lackluster performance, saying the reduced demand led to a corresponding effort to adjust production and inventory levels. The company also blamed foreign currency exchange changes for a drop of as much as $30 million in second quarter operating earnings.
Net sales for the 2001 second quarter were $3.58 billion, down less than 1 percent from the same period last year. For the six-month period in 2001, Goodyear has lost $38.9 million, vs. earnings of $125.3 million in 2000.
Sales also dropped 3.8 percent for the half-year, to $7 billion from $7.27 billion in 2000.
In North America, tire sales were up 4 percent, due in large part to a million units Goodyear shipped as replacements for the Firestone Wilderness AT tires Ford Motor Co. is replacing on its Explorer sport-utility vehicle and Ranger pick-up trucks. Overall, the volume of tires shipped was 28.9 million units, on par with the 2000 second quarter; first half shipments of 54.7 million units were down 4.6 percent.
North American Tire operating income fell 43.1 percent, to $49 million, for the quarter, and 52.8 percent for the six months, to $64.4 million. North American Tire sales were up 4 percent, to $1.83 billion, for the quarter, while sales for the six months were down 1 percent, to $3.45 billion.
Goodyear's earnings equated to 5 cents a share, about on par with analysts' projections. Analysts expect the tire maker to earn 26 cents per share in the third quarter and 36 cents per share in the fourth quarter, according to a consensus report.