Goodyear expects to report record sales of nearly $20 billion in 2005 when it publishes its fourth quarter and 2005 earnings results before the market opens on Feb. 16.
Goodyear said it also expects to post sales of more than $4.9 billion in the fourth quarter. That figure would be up 2.1 percent from 2004's fourth quarter sales of $4.8 billion. Full-year sales in 2004 were $18.4 billion.
Goodyear did not provide guidance on its profit prospects for 2005. In 2004 the tire maker posted net income of $115 million, but for the first nine months of 2005, Goodyear reported net income of $279 million on sales of $14.8 billion.
Segment operating income for the year should be up 20 to 25 percent from 2004's $945.5 million, Goodyear said, putting 2005's result in the neighborhood of $1.13 billion to $1.18 billion. Segment operating income for the first nine months of 2005 hit $938 million.
Fourth quarter segment operating income should be relatively flat with the prior period's $237.5 million, excluding the impact from 2005's hurricanes. In the third quarter of 2005, Goodyear reported after-tax charges of $10 million relating to the hurricanes, but the tire maker did not estimate the storms' impact on the fourth quarter. Goodyear's tire plants had resumed normal production levels in mid-October, already into the fourth quarter.
Raw material costs also played a negative part in the fourth quarter. Those costs were up about 13 percent for the quarter-higher than the Akron-based tire maker had anticipated, the firm said.
``We are working worldwide to reduce our costs and working capital needs, as well as to further improve our product and brand mix,'' said Robert Keegan, chairman and CEO. ``Nevertheless, the escalating cost of raw materials and currency fluctuations continue to challenge our business.''
In a note to investors, Morgan Stanley analyst Jonathan Steinmetz said the flat segment operating income expectation for the fourth quarter likely was due to the raw material situation as well as weaker sales, possibly internationally.
``This news is not a complete surprise given the recent warnings by other tire companies globally, including Hankook Tire,'' Mr. Steinmetz wrote. He retained his ``equal-weight'' rating but expressed concern that Goodyear's cash flow will be largely used to sustain legacy liabilities.
Goodyear's stock price tumbled on the notice about raw material costs to $15.64 on Jan. 31 from $18.76 on Jan. 30 before the announcement-a loss of 16.6 percent. Cooper Tire & Rubber Co.'s stock also fell 8 percent on the news to $14.99 from $16.29 as analysts warned that Cooper would have faced the same raw material headwinds as Goodyear.