Goodyear Sets Quarter and Half-year Sales Records
Godyear Tire & Rubber Co today reported second quarter sales of $5.1 billion (up 3 per cent on 2005), a record for any quarter. Segment operating income reached $267 million, with net income amounting to $2 million. According to the company, the sales growth reflects improved pricing and product mix driven by demand for the company’s branded tyres in the consumer replacement markets, and the favourable impact of currency translation. Revenue per tyre increased 7 per cent compared to the second quarter of 2005.
The 2006 quarter was impacted by higher raw material costs of $210 million, an increase of 16 per cent compared to the 2005 quarter, and weak tyre industry demand, particularly in North America. Goodyear sold 54 million units in the second quarter of 2006 compared with 56.4 million units in the 2005 period, reflecting primarily weakness in the North American consumer replacement market.
While business was strong in four out of six of Goodyear’s international business units, European Union Tire and North American Tire both sold few tyres than during the same period last year.
While second quarter and first half sales were still strong ($1.25 billion $2.384 billion respectively) Operating income slipped from $85 million in the second quarter of 2005 to $58 million in the same period this year. Half-year figures repeated the same pattern, with segment operating income totally $130 million in the first six months of this year down from $192 million in 2005. In the second quarter of 2006 European Union Tire sold 15.7 million units (2005:15.9 million) and 31.3 million (2005:31.9 million) in the first half.
North American Tire sales reached a second quarter record, up 2 per cent compared to the 2005 period. According to Goodyear the increase was driven by improved pricing and product mix, and higher sales in chemical and other tire related businesses, offset by decreased volume in the lower-value segment of the consumer replacement market. Price and product mix improvements of $91 million were not enough to offset raw material cost increases of approximately $98 million.
Actions such the closure of the Dunlop’s Washington UK factory in the second quarter and the proposed closure of a tyre plant in New Zealand were given as examples of the moves that have enabled the global company to reduce costs. Goodyear reports that it reduced selling, administrative and general expenses by 7 per cent compared to the second quarter 2005.
“Results remained strong in four of our businesses, and while we are making good progress in reducing our global cost structure against our previously announced plan of $750 million to $1 billion by 2008, we know more needs to be done,” said Robert J. Keegan, Goodyear chairman and chief executive officer.