Goodyear reports third quarter earnings
AKRON, Ohio — The Goodyear Tire & Rubber Company reported record third quarter sales of $5.1 billion, up 3 percent from last year, offsetting lower volumes with higher prices and a richer product mix.
Improved pricing and product mix in all five business units drove revenue per tire up 7 percent over the 2006 quarter. Lower volumes reflect the strategic decision to exit certain segments of the private label tire business in North America, along with weak markets.
“Our outstanding third quarter is evidence of the success we are seeing in marketing our premium product lines while remaining focused on improving our cost structure,” said Robert J. Keegan, chairman and chief executive officer. “Despite market challenges, our results are among the best ever achieved by Goodyear.
“Our product, brand, customer and geographic mix drove margin expansion.”
The company achieved a gross margin of 20 percent in the quarter, up from 17.4 percent a year ago.
“North American Tire delivered dramatic earnings improvement despite lower volumes,” he said. “This reflects its new product success, strong marketing initiatives and cost savings efforts.”
Each of the five business units achieved double digit or better percentage growth in segment operating income for the quarter. The company’s three emerging markets businesses increased sales 15 percent and segment operating income 24 percent over last year.
Keegan said the company made further progress during the third quarter on its plan to achieve $1.8 billion to $2 billion in gross cost savings by the end of 2009.
“We have now achieved nearly $900 million in savings and remain on track to reach our four-year goal,” he said.
North American Tire third quarter sales were down 6 percent compared to the 2006 period, primarily due to lower volume resulting from the company’s exit from certain segments of the private label tire business as well as weak original equipment and replacement markets. This was partially offset by market share gains in Goodyear brand tires and improved pricing and product mix.
Third quarter segment operating income is the highest since the third quarter of 2001. It was up 247 percent compared to the 2006 quarter due to improved pricing and product mix of $60 million, which more than offset increased raw material costs of $8 million.
Goodyear is one of the world’s largest tire companies. The company employs about 70,000 people and manufactures its products in more than 60 facilities in 26 countries around the world. For more information about Goodyear, go to www.goodyear.com/corporate.