AKRON (April 24, 2002)—Citing on-going weakness in retail tire demand in North America and other key markets, Goodyear posted a net loss of $63.2 million in the first quarter of 2002.
This compares with a net loss of $46.7 million in the same period last year.
Sales slipped 3 percent to $3.31 billion during the quarter, despite a 0.7-percent increase in tire unit volume of 53 million units.
Goodyear said the quarter's results included a pre-tax charge of $10 million that was related primarily to the return of inventory following the April 6, 2002 closure of the Penske Automotive Centers in the U.S.
In addition, the quarter also was affected by approximately $95 million in costs resulting from significant production cutbacks in the fourth quarter of 2001 due to inventory reduction programs and lower demand.
Foreign currency exchange issues also impacted earnings negatively by $13 million, primarily due to currency devaluation in Argentina, the tire maker said.
Goodyear Chairman Sam Gibara said he was disappointed in reporting a loss but expects the company to make progress in the second quarter. “Our commitment to cash generation continues to remain a priority,” he said. “Goodyear's working capital requirements at the end of the first quarter were over $1 billion below comparable levels a year ago.”
In North America, Goodyear reported an operating loss of $51.3 million resulting primarily from higher costs due to production cutbacks in last year's fourth quarter, the charge related to the Penske closure and a shift in channel and product mix.
Sales grew 1.7 percent in the region to $1.65 billion, despite a 2.5-percent drop in replacement tire volume.
Shipments to original equipment customers, however, grew 10.5 percent, resulting in an overall unit volume increase of 1.5 percent during the quarter to 26.2 million units.
Goodyear said the sales increase was due to the higher OE volume, the 500,000 tires it supplied in connection with Ford Motor Co.'s tire replacement program and price increases enacted during the period.