AKRON—Improved operating income in all its tire business segments lead Goodyear to first-quarter net profits of $68 million, compared with a $78 million net loss a year earlier.
The fourth consecutive profitable quarter came as the company reported 11.6-percent higher sales for the three-month period that ended March 31 to $4.8 billion, a first-quarter record. Goodyear attributed the sales increase to higher pricing, a more favorable product mix and favorable currency translation of about $126 million.
The North American, Latin American, European Union and Asia/Pacific tire businesses all drove the earnings improvement despite rapidly rising raw material costs, according to Robert J. Keegan, Goodyear chairman and CEO. Only the non-tire Engineered Products segment showed a decline in operating profits, although its sales rose, mostly because of improved volume in the industrial and military markets.
North American Tire achieved its fourth consecutive quarter of positive operating income, $11 million compared with a $24 million operating loss a year earlier. Sales rose 10.3 percent to $2.14 billion because of volume increases, favorable pricing and product mix and cost reduction activities. Goodyear said North American Tire´s raw material costs increased about $64 million during the quarter.
The European Union business´ operating income rose 52.9 percent to $107 million on 8-percent sales growth to just about $1.2 billion. Operating profits jumped 9.3 percent for the Eastern Europe, Middle East and Africa tire operations on a 20.1-percent sales hike to $340 million. The Latin America Tire segment posted a 40-percent increase in first-quarter operating earnings to $87 million, while sales climbed 14.9 percent to $348 million.
The Asia/Pacific Tire business more than doubled its operating income to $19 million, while sales climbed 5.6 percent to $341 million.
Goodyear´s Engineered Products division´s operating income fell 4.5 percent to $21 million. Sales rose 16.9 percent to $402 million.
The total operating income from Goodyear´s business segments increased 61.3 percent from the 2004 period to $292 million.
Goodyear´s results include net after-tax gains of $7 million from reversals of rationalization charges and net after-tax charges of $12 million related to general and product liability-discontinued products.
Tire unit volume in the first quarter jumped 200,000 units from the year-ago period to 55.9 million units. Goodyear said unit volume change was impacted by a 7.9-percent increase in the North American replacement market and offset by lower original equipment volumes of 8.7 percent in North America and Europe. North American Tire´s commercial tire business saw a 14.9-percent rise in volume.