Goodyear reports 27% increase in 2013 operating income
Goodyear Tire & Rubber Co. has reported full-year 2013 annual sales of US$19.5 billion, down 7 per cent from 2012. However, operating income was up 27 per cent compared with 2012 at $1.6 billion. Reference to the news that Sumitomo and Goodyear are looking to end their international joint ventures were noticeable by their absence from the official results reports. The company reported that it generated more than $1 billion of free cash flow from operations, resulting from higher net income and a $415 million benefit from working capital.
Referring to the 7 per cent drop in annual sales, Goodyear executives explained that this came in part from $166 million of lower tyre unit volumes and $206 million from lower price/mix. According to the company, unit volumes totalled 162.3 million, down 1 per cent from 2012.
Fourth quarter figures
All this was supported by fourth quarter results that ultimate reflected the annual result. Goodyear’s fourth quarter 2013 sales were $4.8 billion, down 5 per cent from the year ago quarter. Fourth quarter 2013 sales reflect $64 million in higher tyre unit volumes and $36 million in lower price/mix due to lower raw material costs. Tyre unit volumes totalled 40.7 million, up 2 per cent from the fourth quarter of 2012.
“As industry volumes recover, we continue to see mixed growth rates globally, but there is strong growth in the high-value-added segments we are targeting,” Kramer said. “We remain disciplined in our approach, seeking growth where our brands and value proposition enhance our profitability.”
“Our outstanding fourth quarter and full-year earnings confirm that our strategy is working and demonstrate Goodyear’s ability to deliver sustainable earnings growth and strong free cash flow,” said Richard J. Kramer, chairman and chief executive officer. “Our North America business achieved record earnings in all four quarters of 2013.”
EMEA sales value, volume and OE up
|Fourth Quarter||Twelve Months|
|Sales||$ 1,631||$ 1,602||$ 6,567||$ 6,884|
|Segment Operating Income||101||38||298||252|
|Segment Operating Margin||6.2%||2.4%||4.5%||3.7%|
Europe, Middle East and Africa’s fourth quarter sales increased 2 per cent from 2012. Sales reflect a 1 per cent increase in tyre unit volume and favourable foreign currency translation of $27 million, which was partially offset by lower price/mix. Original equipment unit volume was up 4 per cent.
Fourth quarter 2013 segment operating income of $101 million was $63 million above the prior year. It would be difficult to miss the fact that the company has ceased production at its Amiens North plant in France, which produced consumer and farm tyres. The facility will close finally during the first quarter of 2014. The timing of the company’s exit from the Europe, Middle East and Africa farm tyre business will be determined later in the year. According to the firm, these actions will result in about $75 million of annual profit improvement, with approximately $40 million expected in 2014.