AKRON, Ohio – The Goodyear Tire & Rubber Co. has reported record earnings for the second quarter of 2013.
"Our outstanding second quarter earnings demonstrate the disciplined execution of our strategies by Goodyear associates around the globe as our operations become more efficient, reliable and integrated,” said Richard Kramer, chairman and CEO. “We are leveraging this increased integration along with our product innovation to deliver sustainable earnings improvement through the cycle.
“We achieved significantly higher earnings, with record operating income in North America and Asia Pacific,” he said. “Our objective remains to focus on profitable targeted market segments where we can capture the value of our brands and prepare ourselves to take advantage of the market recovery when it comes.”
Goodyear reports that all four of its regional businesses achieved higher operating income in the second quarter compared to the year-ago period. Three businesses posted higher tire unit volumes than last year.
Commenting on Goodyear’s performance in Europe, Kramer said the company is seeing signs of volumes stabilizing and is achieving success in the summer tire market with industry-leading label-graded tires that have won numerous magazine tests versus competitors.
“Our strong first-half performance gives us confidence in our full-year outlook for global segment operating income, which we now expect to be about $1.5 billion, at the high end of our previously announced range of $1.4 billion to $1.5 billion, and the highest ever achieved by the company,” Kramer said. “Additionally, we continue to target positive cash flow in 2013, excluding pension pre-funding.”
Goodyear’s second quarter 2013 sales were $4.9 billion, compared to $5.2 billion a year ago. The company reported record segment operating income of $428 million in the second quarter of 2013. This was up 27 percent from the year-ago quarter, reflecting favorable price/mix net of raw materials of $92 million, cost savings net of inflation of $38 million (including raw material cost savings of $53 million) and $11 million in higher tire unit volumes, partially offset by unabsorbed overhead of $47 million resulting from lower production and $12 million in unfavorable foreign currency translation.
Goodyear’s second quarter 2013 net income available to common shareholders was $181 million (67 cents per share), a second quarter record and up $96 million from $85 million (33 cents per share) in the 2012 quarter. All per share amounts are diluted.
Year-to-Date Results
Goodyear’s sales for the first six months of 2013 were $9.7 billion, down 9 percent from the 2012 period. Sales reflect $329 million in lower tire unit volumes; $309 million in lower sales in other tire-related businesses, most notably third party chemical sales in North America, and $175 million in unfavorable foreign currency translation. Tire unit volumes totaled 79 million, down 4 percent from 2012.
The company’s first half segment operating income of $730 million was up 16 percent from last year and a record. Compared to the prior year, year-to-date segment operating income reflects favorable price/mix net of raw materials of $250 million and cost savings net of inflation of $73 million (including raw material cost savings of $110 million), which more than offset $174 million in higher conversion costs, primarily driven by unabsorbed overhead resulting from lower production; $49 million in lower tire volume; and $29 million in unfavorable foreign currency translation.
Goodyear’s year-to-date net income available to common shareholders of $206 million (79 cents per share) is up from $73 million (30 cents per share) in 2012’s first half. All per share amounts are diluted.
Outlook
For the full year of 2013 in North America, Goodyear’s industry outlook is unchanged. The company expects consumer replacement as well as commercial replacement and commercial original equipment markets to be at essentially 2012 levels. It expects consumer original equipment volumes to be up approximately 5 percent.
For the full year in Europe, Middle East and Africa, Goodyear’s industry outlook is unchanged as well. The company expects consumer replacement to be at essentially 2012 levels. It expects consumer original equipment volumes to be down approximately 5 percent and commercial original equipment to be flat to up 5 percent. Commercial replacement is expected to be up about 5 percent.
