AKRON, OHIO — Thanks to improved pricing and product mix and increased unit sales and despite a shaky final quarter Goodyear Tire & Rubber Co. reported record yearly sales and its highest net income in eight years.
The company released its final 2005 financial results this morning.
For 2005, Goodyear posted total sales of $19.7 billion, up 7 percent from 2004’s $18.4 billion in sales. Net income for the year reached $228 million, nearly double 2004’s $115 million.
Raw material costs, though, dogged Goodyear and all tiremakers. Goodyear said its raw material costs jumped 11 percent for the year vs. 2004, translating into some $550 million in added costs.
Goodyear’s North American Tire unit sales revenue hit $9.09 billion for the year, up from 2004’s $85.7 billion, but unit sales fell from 102.5 million units in 2004 to 101.9 million tires last year.
At the same time, the North American Tire group reported operating income of $167 million in 2005 compared to $74 million in 2004.
Goodyear said total global debt was cut by $257 million, and net debt was reduced by $467 million, while the company made more than $500 million in contributions to its pension plans.
The fourth quarter didn’t help matters. Goodyear hit $4.9 billion in sales for the period. Hurricanes, raw materials and other factors, though, drove net profit for the period down to a net loss of $51 million vs. net income of $125 million in 2004’s final period. Raw materials alone jumped $160 million in the quarter, Goodyear said, up 13 percent vs. the same period in 2004.
“Strong demand for our innovative new tires coupled with improved marketing drove a richer product mix and record sales for the company,” said Robert Keegan, Goodyear’s chairman and CEO. “Our company completed another very good year, and I am extremely proud of the progress we made in 2005.
“Our new product success reflects our commitment to understanding consumer needs and providing them with relevant technology to meet those needs,” he said.
“While escalating raw material costs and currency fluctuations will continue to challenge our business, our fundamentals remain sound. We believe the impact of our innovative new products, together with intensified efforts to reduce costs and improve our mix, gives us a solid foundation to continue our turnaround,” Keegan said.
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