AKRON (Feb. 15, 2012)—Continued economic weakness in several markets may slow the pace of long-term growth in the tire industry, but it won't halt it, according to Goodyear's top officials.
The company, which posted strong sales and earnings results in the fourth quarter and for 2011, expects its 2012 tire unit volume to be essentially the same as 2011, it said in its annual report, released Feb 14.
Goodyear anticipates the consumer replacement market to be flat to down 2 percent with consumer original equipment tires flat to up 3 percent. Commercial replacement tires are expected to be up by 3- 6 percent while commercial original equipment should climb 10-15 percent.
In Europe, the consumer replacement tire sector is projected to be flat to down 2 percent, consumer original equipment off by 5-9 percent, commercial replacement to drop by 3-8 percent and commercial original equipment falling by 20-25 percent.
The company also anticipates its raw material costs for the first quarter of 2012 will increase between 20 and 25 percent over last year. Small increases are expected for the second quarter, while the second half should decrease compared with the same period in 2011.
The tire maker closed out 2011 on a strong note with net income of $18 million, compared to a net loss of $177 million in the 2010 fourth period. Sales for the quarter hit $5.68 billion, up 12 percent from 2010.
Net income for 2011 jumped to $321 million, compared to a net loss of $216 million the previous year, on a 20.9-percent increase in sales to a record $22.8 billion. Goodyear said revenue-per-tire increased 17 percent over 2010, excluding the impact of foreign currency translation.
Goodyear said the increase for the fourth quarter was offset by weaker unit volume sales and unfavorable foreign currency translation, which effectively reduced sales by about $174 million and $49 million, respectively.
Unit volume for the full year was flat compared with 2010, while favorable foreign currency translation increased sales by $599 million.
The Akron-based tire maker's full-year segment operating income hit a record of nearly $1.4 billion, up 49 percent from 2010. However, fourth-quarter segment operating income reached only $196 million, down $28 million from the same period in 2010.
“Despite lower fourth-quarter unit volume, all four of our tire businesses achieved record fourth-quarter and full-year sales as we improved price/mix and gained branded share in our targeted market segments,” according to Chairman and CEO Richard Kramer.
North American Tire's fourth-quarter 2011 sales increased 17.4 percent to $2.58 billion, with OE unit volume up 7 percent and replacement shipments down 3 percent. Operating income for the quarter reached $21 million, and an improved price/mix of $289 million more than offset a $241 million increase in raw material costs.
For the year, the unit posted operating income of $276 million, its best performance since 2000, while the firm's Europe, Middle East and Africa Tire unit reached a record $627 million for 2011.
The company's Latin American Tire and Asia-Pacific Tire units hit fourth quarter sales records of $596 million and $591 million, respectively.