Goodyear Reports Profit in Second Quarter 2010 on Strong Sales Growth, Continued Cost Savings
• Sales up 15% from last year on 10% unit growth, improved price/mix
• Tyre sales increase in all 4 business units reflecting global recovery
• Segment Operating Income up $195 million from last year, Net Income up $249 million
• Record Segment Operating Income in Asia Pacific region
• North American Tire’s Segment Operating Income up more than $100 million
• Year-to-date cost savings exceed $280 million
SHANGHAI, China, July 30, 2010 – The Goodyear Tire & Rubber Company today reported improved tyre unit volumes, higher sales and a net profit in the second quarter of 2010.
“We are very pleased with our strong performance in the second quarter and first half of the year,” said Richard J. Kramer, president and chief executive officer. “Our businesses continue to perform better than a year ago as they capture the benefits of recovering industry demand, strong new product performance and solid productivity improvements. We are clearly on the right path as our strategies position us to grow profitably as markets continue to improve.”
Kramer noted that improved results in the company’s North American Tire business unit made a significant contribution to Goodyear’s second quarter success. “These results are further evidence of the effectiveness of our strategy to drive innovation, improved mix and operational efficiency in the business,” he said.
Goodyear’s second quarter 2010 sales were $4.5 billion, up 15 percent from the 2009 quarter. Second quarter sales reflect the $304 million impact of a 10 percent increase in tyre unit volume due to improved global demand. Sales were also positively impacted by $161 million from higher sales in other tyre-related businesses, primarily third-party chemical sales in North America, and by improved price/mix. Unfavorable foreign currency translation reduced sales by $37 million.
The company had segment operating income of $219 million in the second quarter of 2010, up from $24 million in the year-ago quarter. Compared to last year, second quarter segment operating income reflects higher global demand, strong price/mix performance and cost reduction actions.
Improved price/mix of $121 million in 2010’s second quarter more than offset $54 million in net higher raw material costs ($89 million before raw material cost reduction actions). Unfavorable foreign currency translation reduced segment operating income by $14 million.
The 2010 second quarter included charges of $8 million (3 cents per share) due to rationalizations, asset write-offs and accelerated depreciation, and $3 million (1 cent per share) for a one-time importation cost adjustment, and a gain of $8 million (3 cents per share) on asset sales. All amounts are after taxes and minority interest.
Goodyear’s second quarter 2010 net income was $28 million (11 cents per share), compared with a loss of $221 million (92 cents per share) in the 2009 quarter. All per share amounts are diluted.
“Raw material costs remain a challenge and we continue to see an uncertain economy, but we remain focused on the proven strategies that have enabled us to address these headwinds over time,” Kramer said.
Asia Pacific Tire
Second Quarter Six Months
(in millions) 2010 2009 2010 2009
Tyre Units 5.3 4.8 10.5 8.9
Sales $495 $426 $979 $767
Segment Operating Income 64 57 133 72
Segment Operating Margin 12.9% 13.4% 13.6% 9.4%
Asia Pacific Tire’s second quarter sales increased 16 percent from last year to $495 million due to a 9 percent increase in tyre unit volume with strong replacement market volumes in China and India and favorable foreign currency translation. Original equipment unit volume increased 22 percent, resulting from higher vehicle production. Replacement tyre shipments were up 2 percent.
Segment operating income of $64 million increased $7 million over last year and was a second quarter record. Improved price/mix of $29 million in 2010’s second quarter offset $28 million in higher raw material costs. The increase in segment operating income was also due to higher volume and actions to reduce costs.
“The second quarter of 2010 confirms Goodyear’s ability to execute its growth strategy in Asia Pacific,” said Pierre E. Cohade, president of Goodyear Asia Pacific. “Our year-over-year improvement reflects our commitment to deliver a vibrant new product engine and strengthen the Goodyear branded distribution network,” he added.
“Goodyear’s latest achievements in China are great proof points - our latest product innovation, Eagle EfficientGrip, was recently crowned ‘Comfort Tyre of the Year 2010’ by Motor Trend and we also launched the industry’s first Goodyear Training Center to enhance the skills and capabilities of our branded retailers,” said Cohade. “Innovations inside and outside of the product stream spell the difference for us with our customers, and I thank all our dedicated associates and business partners for making it happen,” he added.