AKRONGoodyear reported record operating income for fiscal 2014 and is on target to exceed the figure by 10 to 15 percent in 2015, according to Goodyear Chairman and CEO Richard Kramer.
Goodyear's segment operating income jumped 8 percent over 2013 to $1.7 billion on the effects of lower raw materials and conversion costs, partially offset by lower price/mix and unfavorable foreign currency translation.
Net income available to common shareholders was $2.4 billion ($8.78 per share). Excluding certain significant items, adjusted net income was $790 million ($2.83 per share).
Sales fell 7.2 percent to $18.1 billion, with $571 million in unfavorable foreign currency translation dragging revenue down. Tire unit volumes totaled 162 million, Goodyear said, as replacement shipments rose 1 percent while OE unit volume was down 3 percent.
We delivered record full-year segment operating income, successfully navigating a challenging global economic environment, Mr. Kramer said. While industry conditions led to mixed results globally, we achieved record fourth-quarter segment operating income in North America as well as in Asia Pacific.
A positive for the Akron-based tire maker was the release of the tax valuation allowance, which represents a one-time, non-cash benefit to earnings in 2014. The company will record charges for income taxes in future periods, but it does not expect to pay cash taxes in the U.S. for approximately five years.
The release of our $2.2 billion U.S. tax valuation allowance after 12 years is a major milestone for Goodyear, Mr. Kramer said. It marks the completion of the successful turnaround of our North America business.
Goodyear said momentum in North America is leading management's confidence to project earnings growth.
The company's fourth-quarter operating income fell 14.3 percent to $359 million, driven by reduced price/mix and lower volume, which more than offset the benefits of lower raw material costs and other cost savings actions.
Fourth-quarter sales fell 9 percent to $4.4 billion, with $256 million in unfavorable foreign currency translation and $181 million in lower sales volume in Europe, Middle East and Africa driving the decline.
Tire unit volumes totaled 39.5 million for the fourth quarter of 2014. Original equipment unit volume slid 1 percent, primarily due to continued industry weakness in Latin America. Replacement tire shipments fell 4 percent due to lower sales of winter tires in Europe resulting from one of the warmest winters on record.
Goodyear's North American sales fell 6.9 percent to $8.09 billion, but segment operating income jumped 16.2 percent to $803 million. Unit sales were off 1 percent to 61.1 million.