Goodyear reports record operating income

AKRON (April 29, 2015) — Goodyear reported record operating earnings for the first quarter of 2015 and returned to the black on a net basis on 10-percent lower sales.  

“Our strong first quarter provides solid momentum as we start 2015,” said Richard  Kramer, chairman and CEO. “We overcame significant foreign currency headwinds and delivered record earnings led by North America, which achieved its fourth consecutive quarter of segment operating income margin of more than 10 percent.”

Goodyear's segment operating income rose 4.8 percent to $391 million on sales of $4.02 billion. The net result was $236 million, up from a $38 million loss a year ago.

Volume growth was 2 percent, Goodyear said, to 40.8 million units. OE volume was up 3 percent, while replacement shipments rose 2 percent.

“Our volume growth was driven by market demand for our award-winning, high-value-added products and gives us increased confidence in our outlook for the remainder of the year,” Mr. Kramer said.

Goodyear cited higher sales volume, a net benefit from changes in price/mix and raw material costs and improvements in other cost items for its earnings improvement.

These improvements were partially offset by unfavorable foreign currency translation.

The net income includes a one-time non-cash gain of $155 million ($99 million after taxes and minority interest) for the recognition of deferred royalty income, resulting from the termination of a licensing agreement associated with the company's former Engineered Products business.

The first quarter 2014 net loss was affected by a foreign currency exchange charge in Venezuela.

In North America, Goodyear reported a 26.9-percent improvement in operating income to $198 million on 1.1-percent lower sales of $1.86 billion. Unit sales edged up 1.4 percent to 14.8 million tires. OE unit volume was up 2 percent.

 For fiscal years 2015 and 2016, Goodyear said it expects segment operating income growth of between 10 and 15 percent per year and positive free cash flow from operations.

The company paid a quarterly dividend of 6 cents per share of common stock on March 2. The board of directors has declared a quarterly dividend of 6 cents per share payable June 1 to shareholders of record on May 1.