AKRON (March 16, 2005)—Goodyear posted its first annual profit since 2001 with net income of $114.8 million in 2004, up from a loss of $807.4 million a year ago. This follows a loss of $1.25 billion in 2002.
The tire maker also posted record net sales for the year of $18.4 billion vs. $15.1 billion in 2003.
North American Tire (NAT)—the tire maker's largest business unit that has struggled in recent years—also ended with a profit, with segment operating earnings of $31.5 million in 2004 compared with a loss of $130.9 million in 2003. Sales rose to $7.85 billion for the year, up 16.4 percent from $6.75 billion in 2003.
Tire unit volume in NAT grew to 25.5 million units from 24.5 million units for the quarter and to 102.5 million units from 101.2 million units for the year.
For the fourth quarter, Goodyear posted record sales of $4.83 billion, up 23.5 percent from $3.91 billion a year ago. The company also posted net income of $124.6 million in the quarter vs. a loss of $427.0 million in 2003 after income taxes.
NAT in the fourth quarter posted sales of $2.02 billion vs. $1.67 billion a year ago. The unit also reported segment operating income of $15.8 million compared with a loss of $14.7 million the prior year.
Akron-based Goodyear said the improvement in its overall annual results where boosted by a fourth quarter after-tax gain of $156.6 million from an insurance settlement, among other positive benefits.
The tire maker said the company's results are “highly dependent” on the NAT segment, which contributed about 43 percent of consolidated net sales in 2004, according to the company's 10-K filing. Goodyear said the improvement resulted primarily from better pricing and a shift in product mix to more profitable Goodyear-brand tires.
Still high legacy costs to North American retirees led NAT to contribute just 2.9 percent of total segment operating income though it accounted for 41 percent of total segment sales.
Total segment operating income in the fourth quarter from the company's business units grew 56 percent to $271 million. For the year, total segment operating income more than doubled to $1.1 billion from $511 million in 2003.