AKRON (Feb. 16, 2006) — Goodyear reported record sales in 2005 of $19.7 billion with net income of $228 million—the Akron-based tire maker's highest profit since 1998.
For the fourth quarter, however, Goodyear posted sales of $4.93 billion yet a net loss of $51 million. The company said the net income figure includes a $78 million after-tax loss on asset sales.
North American Tire (NAT)—Goodyear's largest business unit and the focus of the firm's turnaround—reported a jump of 125.7 percent in 2005 net income to $167 million from $74 million in 2004. Sales grew 6.1 percent to $9.09 billion. But tire units decreased 0.6 percent to 101.9 million units.
In the fourth quarter, NAT posted a 48.3-percent gain in net income to $43 million from $29 million. Sales rose 3.8 percent to $2.29 billion, but tire units again fell 3.1 percent to 24.7 million units. Goodyear said the sales rose on better pricing and product mix, but volume was down as part of its selective strategy in the lower-value segment of the replacement market.
Total segment operating income rose 23 percent to nearly $1.2 billion. For the fourth quarter, total segment operating income fell to $226 million from $237.5 in the prior year's period. Goodyear had warned it experienced 13-percent higher raw material prices in the quarter, but they were offset by improvements in price and mix. The firm said last fall's hurricanes impacted the quarter by $15 million.
Goodyear said raw material costs increased 11 percent—or about $550 million—for the full year. But those increases were offset by a price/mix improvement of about $635 million.
Goodyear also said it reduced its total debt by $257 million in 2005 and contributed more than $500 million to its pension plans.
“Our company completed another very good year, and I am extremely proud of the progress we made in 2005,” Chairman and CEO Robert Keegan said. “I am gratified by the work of our people, who demonstrated an intense, informed market focus and a commitment to innovation and building strong brands.”
The Akron-based tire maker also noted that two material weaknesses in its financial reporting have been remedied as of Dec. 31.