AKRON (April 25, 2008) — Goodyear achieved record first quarter sales and its best first quarter net profits in several years, thanks to better pricing and product mix that offset lower volume.
A year after it lost $174 million in the first quarter — results affected by a long strike — Goodyear posted quarterly net income of $147 million. Sales rose 9.8 percent to $4.94 million, the tire maker said, aided by favorable currency translations.
In its North American Tire segment, Goodyear reported a $32 million operating income for the quarter, after a year-ago operating loss of $20 million. Sales tire unit sales slipped 7.8 percent to 17.8 million for the quarter compared to a year earlier.
The company's three business segments outside North America achieved record sales because of emerging markets.
Improved pricing and product mix in all four business segments drove revenue per tire up 7 percent over the 2007 quarter, attributable to the company's strategy to focus on high-value-added tires, Goodyear said. Volume sales were hampered by a weak original equipment market in North America and soft consumer replacement demand in North America and Europe, particularly for lower-value tires.
Goodyear said it made progress during the first quarter on its plan to achieve $1.8 billion to $2 billion in gross cost savings by the end of 2009.
North American Tire's first quarter sales dipped 1 percent from last year to $2 billion. The 2007 quarter included approximately $150 million in sales from its minority interest in T&WA, a tire-wheel mounting business in Louisville, Ky., which the company divested in December 2007.
Sales in the 2008 quarter were impacted by reduced OE volume resulting from lower vehicle production and a drop in the passenger tire replacement market, particularly for low value-added tires, according to the company.
North American Tire's operating income of $32 million benefited from improved pricing and product mix of $67 million, which offset increased raw material costs of $5 million. Lower selling, administrative and general expenses and structural cost savings, including savings from the 2006 contract with the United Steelworkers union, were partially offset by lower volume and transitional manufacturing costs, the company said.