AKRON (July 30, 2009)—Despite a restructuring-related net loss of $221 million and 24.7-percent lower sales in the second quarter, Goodyear's top executive termed the performance “respectable and encouraging” in light of the challenging economic climate.
Goodyear Chairman and CEO Robert Keegan based his assessment on the quarter's outcome versus the first quarter of the fiscal year, saying, “Our results strengthened compared to the first quarter as reduced raw material costs and our strategic actions aimed at our top line, cost savings and cash generation continue to have the desired effect.
For the three months ended June 30, Goodyear reported total segment operating income of $24 million versus a segment operating loss in the first quarter. The pre-tax result fell $271 million into the red versus $167 million in earnings a year ago.
Sales fell to $3.94 billion as all operating regions suffered double-digit revenue declines, with the Europe, Middle East and Africa segment dropping the most, 31.2 percent.
North American Tire reported a 20.8-percent drop in sales to $1.69 billion and a segment operating loss of $91 million as units sold fell 19.1 percent. Replacement unit shipments were down 4 percent, meaning the Goodyear brand gained market share.
More than half of the corporate sales decline was related to a 17-percent drop in global tire unit volume, Goodyear said, with currency translation losses and lower third-party sales of chemicals in North America comprising most of the rest. Excluding the impact of currency translation, sales were down 18 percent from last year.
Looking ahead, Keegan said, “We are beginning to see some signs of economic stabilization and recovery, although still fragile at this stage and varied around the globe.”
During the quarter, Goodyear said it achieved $200 million in cost savings on top of $145 million in the first quarter. It cut its work force by 1,700 employees on top of 3,800 cut in the first quarter, thereby exceeding its 2009 goal of 5,000 job cuts.
For the first half, Goodyear's net loss was $554 million versus earnings of $222 million a year ago. Sales were off 26.5 percent to $7.48 billion and the pre-tax loss was $636 million.