UPDATE: Goodyear Swings To 2Q Loss, Beats Analyst Estimates
July 30 2009 - 9:34AM
Dow Jones News
Goodyear Tire & Rubber Co. (GT) swung to a second-quarter
loss of $221 million as the company reduced product shipments in
the wake of auto maker production cuts.
Tire sales fell in all of Goodyear's regions, especially in
North America and Europe, which reflected the biggest decline in
auto maker orders. Shipments to North American auto makers dropped
by more than half while Europe declined 33%.
"There is little debate as to the severity of the economic and
industry downturn we have experienced the past three quarters,"
Goodyear Chief Executive Robert Keegan said in a statement
Thursday. "We are beginning to see some signs of economic
stabilization and recovery, although still fragile at this stage
and varied around the globe."
The results, however, showed that Goodyear's cost-cutting
efforts are taking hold. The company narrowed its loss over the
first quarter when it reported a loss of $333 million, or $1.38 a
share. The company's segment operating income was $24 million,
compared with a segment operating loss of $176 million in the first
quarter.
Goodyear, which sidestepped most of the economic problems of
2008 by producing and selling more high-end tires, is now resorting
to more plant closures, job cuts and price increases to traverse
the world-wide recession. The company cut 5,500 jobs though June,
500 more than its full-year target.
For the quarter, the Akron, Ohio-based company's loss was 92
cents a share, compared with a profit of $75 million, or 31 cents a
share, a year earlier. Excluding one-time charges, Goodyear
reported a loss of 35 cents a share, beating analyst estimates of a
loss of 70 cents a share, according to Thomson Reuters. Sales fell
25% to $3.94 billion.
A bright spot in the results was the Asia-Pacific region which
reported a record $57 million profit. Much of the profit was
attributed to cost reductions that included the closure of a plant
in Australia. The unit also sold tires at higher prices.
Shares of Goodyear, North America's largest tire maker, closed
Wednesday at $13.89 and were down 1% at $13.75 in premarket trading
Thursday. The shares have declined 27.5% over the past 12 months.
The North American unit's sales declined 21% from last year,
reflecting significantly reduced industry demand as well as reduced
sales in other tire-related businesses. The number of tires shipped
dropped to 14.8 million from 18.3 million for the same period a
year earlier. The Europe, Middle East and Africa division saw its
sales decline 31% from last year due to lower tire unit volume and
foreign currency exchange rates. The company shipped 15.8 million
tires, compared with 18.8 million a year earlier. The Latin
American unit's sales declined 24%. The number of tires shipped
dropped to 4.6 million from 5.4 million.
Goodyear's year-to-date loss is now $554 million, or $2.30 a
share, compared with earnings of $222 million, or 91 cents a share,
in the first half of 2008.
-By Jeff Bennett, Dow Jones Newswires; 248-204-5542;
jeff.bennett@dowjones.com