Goodyear started to turn the corner in 2004. Now management is hoping that's only the beginning, and a stretch of growth is in its future.
After three years mired deep in the red, the company showed signs in the first quarter that it was recovering when it reported record sales of $4.29 billion, a 21-percent increase over the 2003 first period, as well as improved segment operating income through its business units and increased tire unit volume. However, it still reported a net loss of $76.9 million, although it was a marked improvement from the $196.5 million loss posted in the like period of 2003.
Goodyear's long hiatus from a profitable quarter ended in the second period when it moved into the black with net income of $25.1 million, compared with a loss of $53 million in 2003's second period, on a 20-percent rise in sales to a new quarterly high of $4.51 billion. Operating income jumped almost 92 percent to $285.8 million.
Even with that, the firm still had a net loss of $51.8 million for the first six months, but that was significantly better than the $249.5 million loss for the period in 2003.
North American Tire, Goodyear's largest division and the one that has suffered the most during the downturn, had net income of $30.4 million for the three months, compared with a $10.2 million loss in 2003. That was the segment's first quarterly profit since the third quarter of 2002.
Goodyear continued the rebound in the third quarter with net income of $36.5 million, compared with a loss of $119.4 million the previous third period. The company again posted record sales of $4.71 billion, up 20.7 percent from the 2003 third period.
North American Tire contributed heavily to that improvement with operating income of $13.5 million, compared with a loss of $13.6 million in 2003, on a 17-percent increase in sales to $2.07 billion.
In fact, all seven of Goodyear's business units reported higher segment operating income.
The company still had a net loss of $12.3 million for the first nine months of 2004, compared with a whopping loss of $372.3 million for the nine-month span last year. Sales rose 20.8 percent to a new high of $13.5 billion.
Keys to Goodyear's 2004 comeback were the success of the Assurance tire line, which has been selling beyond expectations; other gains made by new Goodyear product brands; pricing and product mix improvements; cost reduction efforts; and implementation of programs aimed at improving its business economics.