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