For the first time in nine years, Goodyear has lost money over a fiscal 12-month period.
The tire maker reported a net loss of $203.6 million, or $1.27 per share, in 2001. But the Akron-based company also said it managed to gain market share in a depressed tire industry and made important changes during the year to position itself for future recovery.
Goodyear's loss for the year ended Dec. 31 was down from the net income of $40.3 million posted in 2000. Net sales for the year were $14.1 billion, a 1.9-percent fall from $14.4 billion the year before. The company's tire volume was down 4 million units, or 1.8 percent, during the year to 219.3 million units.
For the fourth quarter, the company had a net loss of $174 million, or $1.07 per share, the firm announced Feb. 8. The result was a 41.4-percent smaller loss than the like period of 2000, when the company posted a net loss of $102 million. Net sales for the quarter dropped 1.5 percent to $3.47 billion.
Samir G. Gibara, Goodyear chairman and CEO, said the negative results were worsened by depressed economic conditions, continued weak global demand and the costs of reducing production to align inventory levels with demand.
The company made production and personnel cutbacks and inventory reductions in 2001 to help eliminate high manufacturing costs. About 10,000 jobs were slashed in 2001, and fourth-quarter production cuts overseas will spur another 3,500 job reductions, the company said.
The actions abroad include the elimination of truck tire production in Wolverhampton, England; the closing of two Australian tire facilities that are part of Goodyear's South Pacific Tyres Ltd. joint venture; and the shutdown of the Marikina tire plant in the Philippines.
The 2001 reductions resulted in about $320 million in unabsorbed costs-$150 million in the fourth quarter, Mr. Gibara said. Another $80 million in costs will hit the company in 2002's first quarter, a spokesman said.
Industry shipments decreased 6 percent in 2001, and the U.S. consumer replacement market was down 8.5 percent in the fourth quarter. But the Goodyear brand helped the company gain market share globally, including two points in North America, Mr. Gibara said.
Other positives from 2001 were the successful implementation of two price increases-with one more to be realized in the 2002 second quarter-the inventory reduction of $500 million, a net debt reduction of $700 million and generation of $806 million in positive cash flow, the company said.
Goodyear is expecting the tire industry to remain a difficult environment in which to do business, with North American and European economic conditions staying weak and global volumes down slightly from 2001. The firm's strategies revolve around improving its revenue per tire and continuing to reduce costs.
``I think (Goodyear) took some steps in the right direction, like looking to improve its revenue per tire, but what will the cost be?'' said Efraim Levy, an analyst with Standard & Poor's Corp. in New York. ``Things may be uncertain the first year or two, and they'll reap the benefits later. But the changes won't be simple or dramatic in the short-term.''