Goodyear scored another achievement in its financial turnaround, posting in the third quarter its highest quarterly net income in seven years in the sixth consecutive quarter of profits.
Turnaround efforts still continue, however, as the Akron-based tire maker announced last month that the next phase of its efforts will seek to trim $750 million to $1 billion in costs, reduce debt and possibly close manufacturing plants. Goodyear also wants to increase its North American segment operating margin to 5 percent. It now stands at 2.4 percent for the third quarter and 1.8 percent for the nine months.
The company further plans to increase its total segment operating income to 8 percent from its year-to-date 6.3 percent. The quarter was buoyed by record net sales plus strong results in the company's tire business. Third quarter net income rose to $142 million for the period, compared with $38 million a year ago. Sales grew 7 percent to $5.03 billion.
For the nine months, Goodyear had net profits of $279 million on sales of $14.8 billion, compared with a loss of $10 million on sales of $13.5 billion in 2004.
In its North American Tire unit, sales increased 5 percent to $2.37 billion and segment operating income more than doubled to $58 million from $27 million in the quarter. But tire unit volume in the quarter was flat at 26.6 million units. Revenue per tire increased 6 percent in North America and 4 percent for the entire company.
The nine-month period showed similar results, with sales rising 6.9 percent to $6.8 billion and segment operating income leaping 181.8 percent to $124 million. But tire unit volume rose about one-tenth of a percent to 77.2 million units from 77.1 million units. Total segment operating income also rose 21.3 percent to $330 million.
Five of Goodyear's six business units reported gains in segment operating income except for Engineered Products, which fell to $27 million from $34 million in the quarter.
Goodyear also said damage from Hurricanes Katrina and Rita had a financial impact in the third quarter of about $10 million. Company officials estimated a further $20 million impact in the fourth quarter as well.
Crain News Service contributed to this report.