AKRON (Feb. 10, 2011)—Goodyear's sales were up 14 percent for the fourth quarter of 2010 and 16 percent for the full year compared with the same periods in 2009, according to financial results released today.
Despite improved sales, however, the Akron-based tire maker continued to lose money: $177 million for the quarter, compared with $107 million for the fourth quarter of 2009, and $216 million for the year, compared with $375 million for the full year of 2009.
“Higher raw materials costs are our most significant challenge,” said Goodyear Chairman Richard J. Kramer during a Feb. 10 conference call to discuss the company's results. The price of natural rubber alone, Kramer said, has risen 40 percent since October 2010 to $2.50 per pound.
Foreign currency translations also have hurt profits, including devaluation in Venezuela and a weaker euro, said Kramer and Darren R. Wells, Goodyear executive vice president and CFO.
Fourth-quarter 2010 sales totaled $5.1 billion, with tire unit volumes up 4 percent to 45 million, Goodyear said. Sales in the fourth quarter benefited from an improved price/mix, which drove revenue per tire up 12 percent minus the impact of foreign currency translation, the company said.
Other tire-related businesses, such as third-party North American chemical sales, saw a sales increase of $159 million, although unfavorable foreign currency translation reduced sales by $111 million, Goodyear said.
Full-year sales were $18.8 billion, reflecting the $1 billion impact of an 8-percent improvement in tire unit volume as well as a $582 million increase in sales in third-party chemicals and other tire-related businesses, Goodyear said.
Despite raw material and currency translation headaches, operating income rose for all of Goodyear's business segments, Kramer and Wells said. The company's quarterly segment operating income of $224 million was particularly impressive considering the sharp increases in raw materials costs, they said.
Goodyear's North American tire segment was profitable for both the quarter and the year, while Asia Pacific and Latin American sales achieved records for both periods, according to the company.
Goodyear is on track to achieve its goal of 5-percent return on sales, according to Kramer and Wells. In its ongoing effort to eliminate high-cost capacity on a global basis, they said, the company has decided to close its Union City, Tenn. plant and is planning to sell a farm tire plant in France to Titan Tire Corp.
The company is also working to offset high NR prices by substituting synthetic rubber for NR wherever possible, reducing tire weight and aggressively pursuing alternative materials such as bioisoprene, they said.