AKRON, Ohio -- The Goodyear Tire & Rubber Co. reported improved fourth quarter tire unit volumes, sales and earnings in 2009.

"Our fourth quarter results were solid, with improved gross margins, segment operating income and net income reflecting lower raw material costs, improved volumes and actions to reduce costs. These gains are a reflection of the success we had in strengthening our business despite a challenging economy and operating environment," said Robert Keegan, chairman and chief executive officer.

"Tire demand around the world has begun to recover and we look forward to year-over-year global growth in 2010. The degree of recovery, however, varies considerably by geography and product segment. We remain confident, but many challenges, including high raw material costs and weak commercial truck tire demand, will persist in 2010," he said. "Goodyear's strong market position and growing capabilities will, however, enable us to fully capitalize on the attractive market opportunities available to us."

The company's fourth quarter 2009 sales were $4.4 billion, up 7 percent from 2008's fourth quarter. Fourth quarter sales reflect the $276 million impact of an 8 percent increase in tire unit volume due to improved global consumer tire demand and growth in emerging markets. Weakness continued in commercial tire demand in Europe and North America. Favorable foreign currency translation positively impacted sales by $310 million.

The company had segment operating income of $249 million in the fourth quarter of 2009 compared to a segment operating loss of $159 million in the year-ago quarter. Compared to the prior year, fourth quarter 2009 segment operating income reflects actions to reduce costs along with improved industry demand, which resulted in higher sales and increased production levels. The 2009 quarter benefited from $358 million in lower raw material costs.

Fourth quarter 2009 Goodyear net income was $107 million (44 cents per share), compared to a loss of $330 million ($1.37 per share) in 2008's fourth quarter. All per share amounts are diluted.

Goodyear's annual sales for 2009 were $16.3 billion, down from $19.5 billion in the 2008 period. Sales reflect the $1.4 billion impact of a 9.5 percent decline in tire unit volume primarily due to lower industry demand in North America and Europe, as well as a $924 million reduction in sales in other tire-related businesses, primarily third-party chemical sales by North American Tire. Sales were negatively impacted by a lower mix of high-value commercial truck and OTR tires due to ongoing weakness in those product segments. Unfavorable foreign currency translation further reduced sales by $699 million.

Segment operating income was $372 million compared to $804 million in 2008. This reflects weak industry demand that resulted in a negative volume impact of $266 million, increased under-absorbed fixed costs of approximately $490 million and reduced operating income from other tire-related businesses.

Improved price/mix of $207 million and lower raw material costs of $115 million positively impacted segment operating income in 2009.

The Goodyear net loss of $375 million ($1.55 per share) compares to a net loss of $77 million (32 cents per share) in 2008. All per share amounts are diluted.
Goodyear successfully launched 62 new products during the year, exceeding its goal of more than 50 new product launches during 2009.

During 2009, the company reduced its global workforce by approximately 5,700 positions, exceeding its full-year target of 5,000.

Goodyear said it made further progress during 2009 on its four-point cost savings plan with $730 million in new savings, including $190 million during the fourth quarter. Savings achieved from 2006 through 2009 under the plan total $2.5 billion.

"Although we reached our four-point cost savings goal in 2009, we will continue to attack cost in 2010," Keegan said. "Over the next three years, we expect to achieve gross savings of an additional $1 billion."

Positive cash flow and reduced working capital requirements combined to improve Goodyear's cash and liquidity position. As a result of its supply chain initiative, inventory levels are more than $1.1 billion below the year-end 2008 level, significantly exceeding the goal of a more than $500 million reduction.

"Putting aside economic factors that were outside of our control, we had an impressive performance in 2009," Keegan said. "Whether measured by market share, price/mix net of raw material costs, cost reductions, lower inventory or our excellent cash flow performance, our success in 2009 establishes a solid foundation for the future."