Goodyear Reports Higher Second Quarter Earnings on 24% Sales Growth

The Goodyear Tire & Rubber Company today reported record sales and higher earnings for the second quarter of 2011.“I’m very pleased with our outstanding second quarter results, which represent another step on the path toward our 2013 targets,” said Richard J. Kramer, chairman and chief executive officer. “They present confirmation that our strategies are right and that they are working,” he added.

“Earnings growth in North America is a key outcome of our strategies. North American Tire’s second quarter results show the type of performance we should be able to sustain once we reach our 2013 targets,” Kramer said.Goodyear’s second quarter 2011 sales were $5.6 billion, up 24 percent from a year ago and the highest ever achieved by the company in any quarter. Tire unit volumes totaled 42.9 million, down 2 percent from 2010, primarily reflecting weaker industry volumes, particularly in the North American consumer tire business.

Second quarter sales also reflect strong price/mix improvements, which drove revenue per tire up 18 percent over the 2010 quarter, excluding the impact of foreign currency translation.“All of our businesses continued to make solid progress in driving improved price/mix through innovative product offerings in targeted market segments,” Kramer said. Second quarter sales were also impacted by a $221 million increase in sales in other tire-related businesses, primarily in North America, and favorable foreign currency translation of $348 million.

The company had segment operating income of $382 million in the second quarter of 2011. This was up $163 million from the year-ago quarter and a second quarter record. Segment operating income reflected improved price/mix of $554 million, which more than offset $428 million in higher raw material costs ($381 million net of raw material cost reduction actions).

Goodyear’s second quarter 2011 net income available to common shareholders was $40 million (16 cents per share), compared with $28 million (11 cents per share) in the 2010 quarter.All per share amounts are diluted.

The 2011 second quarter included total charges of $66 million (27 cents per share) due to rationalizations, asset write-offs and accelerated depreciation, financing fees of $53 million (22 cents per share) related to the early partial redemption of 10.5% senior notes, $7 million (3 cents per share) related to discrete tax charges, and $3 million (1 cent per share) in costs related to tornado damage at a manufacturing facility; and a gain of $10 million (4 cents per share) on asset sales.  All amounts are after taxes and minority interest.

Asia Pacific Tire’s second quarter sales increased 27 percent from last year to $626 million, a record for any quarter. Sales reflect strong price/mix performance and favorable foreign currency translation of $63 million. Original equipment unit volume was down 10 percent, reflecting the impact of the natural disaster in Japan. Replacement tire shipments were up 3 percent. Second quarter revenue per tire increased 18 percent in 2011 compared to 2010, excluding the impact of foreign currency translation.

Second quarter segment operating income of $65 million was $1 million higher than last year. Improved price/mix of $83 million more than offset $61 million of higher raw material costs.  Segment operating income was also impacted by $10 million in costs related to the planned start up of a new manufacturing facility in China.“We continue to be very pleased with our performance in Asia after achieving another all time sales record for the second quarter of 2011,” said Pierre E. Cohade, president of Goodyear Asia Pacific. “When adjusting for the incremental start-up expenses associated with the ramp up of our factory in Pulandian, China, we also achieved our highest-ever EBIT quarter,” he said. Currently, the Pulandian factory is now making tires ahead of plan, helping Goodyear grow its market share in China.

“Fueling our performance is the strong demand we have been experiencing in China and India, driven by our latest product innovations like Assurance Fuel Max that continue to gain third party recognition from both the automotive media and our customers,” said Cohade. “We are clearly riding on a positive growth momentum, thanks to all our valued business partners and associates that work hard to deliver our winning strategy with record breaking performances,” he added.