Goodyear earns well in Q3, globally and in Europe
While many of the quarterly results released at the moment make for depressing reading, those published by Goodyear Tire & Rubber yesterday show that the US-based tyre maker is making even better than expected progress on the path back to financial strength. An obviously pleased Richard Kramer reported on 29 October that Goodyear “delivered outstanding earnings growth in the quarter and achieved a segment operating income margin of more than 11 per cent, the highest in more than a decade, despite an increasingly challenged global economy. The chairman and chief executive officer added that “these results reflect our focus on capturing the value of our branded products in the marketplace and continued progress generating cost savings through our operational excellence activities.”
While sales in the third quarter of 2014 were down six per cent to US$4.7 billion, in part due to unfavourable foreign currency translations, and although tyre unit volumes declined two per cent to 41.9 million pieces, operating profit rose 21 per cent year-on-year to $520 million, driven by significant improvements in North America; Europe, Middle East and Africa, and Asia Pacific. Operating profit margin amounted to 11.2 per cent. Third quarter income available to shareholders was $161 million (Q3 2013: $166 million) or $0.58 a share, while adjusted net income was $242 million (Q3 2013: $190 million) or $0.87 a share.
Third quarter sales for Goodyear’s Europe, Middle East and Africa region decreased eight per cent year-on-year to $1.6 billion, reflecting a one per cent decrease in tyre unit volume, lower price/mix and unfavourable currency translation. Replacement tyre shipments were down one per cent and original equipment unit volume was down three per cent. Operating income headed in the other direction however and came to $181 million; this result was 57 per cent higher than a year earlier and attributed primarily to lower conversion and raw material costs as well as cost reduction actions, including savings from the closure of the company’s Amiens Nord tyre plant in France. Operating profit margin for the region was the same as for the company as a whole, 11.2 per cent, up from 7.4 per cent in the second quarter of 2014.
Goodyear anticipates that segment operating income growth in 2014 will be near the high end of the 10 per cent to 15 per cent range. Based on year-to-date performance, the company now expects unit volumes to be flat or increase by up to one per cent over 2013.
Detailed information about Goodyear’s financial results can be found on our company profiles and reports page.