Goodyear says net income a Q3 record
Goodyear Tire & Rubber chairman and chief executive officer Richard J. Kramer says the company’s third quarter results “demonstrate continued sustainable earnings growth and the type of disciplined execution needed to deliver on our targets in 2013 and beyond.”
The company reported a slight year-on-year reduction in sales during the third quarter of 2013, with sales declining US$300 million to $5.0 billion. Q3 2012 sales reflect $82 million in higher tyre unit volumes, which were more than offset by $178 million in lower sales in other tyre-related businesses, most notably a decrease in the price and volume of third-party chemical sales; $89 million in lower price/mix, despite continued favourable mix; and $77 million in unfavourable foreign currency translation. Tyre unit volumes totalled 42.6 million, up two per cent from 2012.
Segment operating income came $431 million in the third quarter of 2013. This was up 24 per cent from the year-ago quarter, reflecting favourable price/mix net of raw materials of $87 million (excluding raw material cost savings), lower unabsorbed overhead of $18 million due to higher production levels and $14 million in higher tyre unit volumes, partially offset by $40 million in higher SAG expenses and $10 million in unfavourable foreign currency translation.
Goodyear’s third quarter 2013 net income available to common shareholders was $166 million (62 cents per share), a third quarter record and up 51 per cent from $110 million (41 cents per share) in the 2012 quarter. All per share amounts are diluted.
“As the industry continues to recover, we see strong volume growth in the segments we are targeting,” said Kramer. “While we continue to be disciplined in our approach, we are seeing growth in unit volumes, including in our North America business, driven by the Goodyear brand.”
All four of Goodyear’s regional businesses achieved higher operating income in the quarter compared to the year-ago period, with North America posting record third quarter operating income. Three businesses posted higher tire unit volumes than last year.
“We now expect to see record segment operating income of more than $1.5 billion in 2013, and continue to target ten per cent to 15 percent annual growth in segment operating income through 2016,” the chairman and CEO continued. “As previously announced, we will take the first steps in our capital allocation plan in the fourth quarter with our reinstated quarterly dividend Additionally, the company continues to target positive cash flow, excluding pension pre-funding, through to 2016.
EMEA sales slightly up, operating income rises 10%
Third quarter 2013 sales in Goodyear’s Europe, Middle East and Africa region increased $4 million from last year to $1.8 billion. Sales reflect a three per cent increase in tyre unit volume and favourable foreign currency translation of $42 million, which was partially offset by lower price/mix. The company’s original equipment unit volume was up 11 per cent, while replacement tyre shipments were flat.
Segment operating income of $115 million in the third quarter was ten per cent above the prior year. Higher tyre unit volumes of $8 million, favourable price/mix net of raw materials of $8 million and $7 million in favourable foreign currency translation more than offset $8 million in higher SAG expenses, the $3 million impact of higher conversion costs and $3 million in lower earnings in other tyre-related businesses.