AKRON (Nov. 3, 2008)—Goodyear's net income from continuing operations tumbled to $31 million from $159 million in the third quarter, despite record sales.
The company's third quarter revenues of $5.2 billion increased 2 percent from the corresponding period last year. The tire maker cited improved pricing, a richer product mix and strength in international markets—which offset lower volume, especially in North America and Europe—as the chief reasons for the increase.
In addition, Goodyear said, sales were impacted by the 2007 divestiture of the company's tire mounting business, which contributed sales of $145 million in last year's third quarter.
Goodyear actually had net income of $668 million in the 2007 third quarter from all operations, but that included a gain of $517 million on the sale of its former Engineered Products business.
The 2008 quarter was impacted by net rationalization charges and accelerated depreciation of $46 million, a loss on settlement of postretirement health care obligations in connection with the establishment of a Voluntary Employees' Beneficiary Association of $13 million, expenses related to hurricanes Gustav and Ike of $7 million, discrete net tax charges related primarily to German operations of $6 million, charges related to the exit of its Moroccan business of $5 million and a gain on asset sales of $2 million, the company said.
Revenue per tire, excluding the impact of foreign currency translation, increased 8 percent over the 2007 quarter, which the firm said reflected global gains in pricing and product mix generated by its strategy to focus on high-value-added tires.
Goodyear said it made significant progress during the period on its four-point plan to cut more than $2 billion from the tire maker's operations by 2009. The firm has trimmed about $1.6 billion so far.