Goodyear Reports Higher First Quarter Earnings
Company press release.- Segment operating income increases, despite weakness in Europe - Three of four businesses report operating income growth - North American Tire earnings up 59%, new first quarter record - Full-year segment operating income outlook remains at $1.4 to $1.5 billion - Company continues to target positive cash flow in 2013, excluding pension pre-funding AKRON, Ohio, April 26, 2013 – The Goodyear Tire & Rubber Company today reported higher earnings for the first quarter of 2013 compared to the year-ago quarter. 'Despite a tough economic environment, we continue to achieve solid earnings improvement,' said Richard J. Kramer, chairman and chief executive officer. 'Our first quarter earnings demonstrate that our strategic focus on improving productivity and selling innovative products in targeted market segments where our brands add value is working, especially in North America, where our business continues to outperform expectations.' Three of Goodyear's four regional businesses posted higher earnings with North America and Asia Pacific posting record first quarter operating income. Asia Pacific and Latin America achieved both increased tire unit volume and higher operating income. 'In Europe, we are taking steps to address weak industry demand brought about by recessionary conditions that continue to impact the auto and tire industries. We are executing a three-point plan to address profitability in this region,' Kramer added.
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'We remain confident in our full-year outlook and continue to expect global segment operating income of $1.4 billion to $1.5 billion in 2013, which would be up more than 12 percent from 2012 and a record,' he said. The company continues to target positive cash flow in 2013, excluding pension pre-funding. Goodyear's first quarter 2013 sales were $4.9 billion, compared to $5.5 billion a year ago. First quarter 2013 sales reflect $364 million in lower tire unit volumes; $178 million in lower sales in other tire related businesses, most notably third party chemical sales in North America, and $115 million in unfavorable foreign currency translation. Tire unit volumes totaled 39.5 million, down 8 percent from 2012, primarily reflecting lower volumes in Europe. The company reported segment operating income of $302 million in the first quarter of 2013. This was up 3 percent from the year-ago quarter, reflecting $230 million in lower raw material costs (before the benefit of cost savings actions) and cost-reduction activities that exceeded inflation, partially offset by $138 million in lower tire volume and associated unabsorbed overhead costs, lower price/mix of $71 million and $17 million in unfavorable foreign currency translation. See the note at the end of this release for further explanation and a segment operating income reconciliation table. Goodyear's first quarter 2013 net income available to common shareholders was $26 million (10 cents per share), compared to a net loss of $11 million (5 cents per share) in the 2012 quarter. All per share amounts are diluted. The 2013 first quarter included a $92 million (37 cents per share) net foreign currency remeasurement loss resulting from the devaluation of the Venezuelan bolivar fuerte; $9 million (4 cents per share) in rationalizations, asset write-offs and accelerated depreciation; a loss of $2 million (1 cent per share) from asset sales; and net gains of $12 million (5 cents per share) due primarily to tax law changes and $6 million (2 cents per share) from insurance recoveries related to the impact of the 2011 Thailand flood. All amounts are after taxes and minority interest. The company's free cash flow from operations was a use of $276 million for the first quarter of 2013. See the note at the end of this release for further explanation and a free cash flow from operations reconciliation table. See the table at the end of this release for a list of significant items impacting the 2013 and 2012 quarters.
