Goodyear 2009 Performance “Impressive” Despite Downturn – Keegan
Describing the company’s fourth quarter 2009 results as “solid”, Goodyear Tire & Rubber chairman and CEO Robert J. Keegan described the improved gross margins, segment operating income and net income achieved as a “reflection of the success we had in strengthening our business despite a challenging economy and operating environment.” However this chirpy final quarter was not enough to deliver sales above those achieved in 2008, and an annual net loss of $375 million was recorded, as opposed to a loss of $75 million a year earlier.
The company’s fourth quarter 2009 sales were $4.4 billion, up seven per cent from 2008’s final quarter. Sales during the three-month period, Goodyear notes, reflect the $276 million impact of an eight per cent increase in tyre unit volume due to improved global consumer tyre demand and growth in emerging markets. Weakness continued in commercial tyre demand in Europe and North America. Favourable foreign currency translation positively impacted sales by $310 million.
A segment operating income of $249 million was recorded during the fourth quarter of 2009 as compared to a segment operating loss of $159 million in the year-ago quarter. 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 the last quarter of 2008.
“Tyre demand around the world has begun to recover and we look forward to year-over-year global growth in 2010,” Keegan continued. “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 tyre demand, will persist in 2010. Goodyear’s strong market position and growing capabilities will, however, enable us to fully capitalise on the attractive market opportunities available to us.”
Goodyear’s annual sales for 2009 were $16.3 billion, down from $19.5 billion in the 2008 period. This figure, says Goodyear, reflects the $1.4 billion impact of a 9.5 per cent decline in tyre unit volume, primarily due to lower industry demand in North America and Europe, as well as a $924 million reduction in sales in other tyre-related businesses, mainly third-party chemical sales by North American Tire. Sales were negatively impacted by a lower mix of high-value commercial truck and OTR tyres due to ongoing weakness in those product segments. Unfavourable foreign currency translation further reduced sales by $699 million. Segment operating income was $372 million compared to $804 million in 2008.
Despite the dispiriting annual figures, Keegan stated “putting aside economic factors that were outside of our control, we had an impressive performance in 2009. 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.”