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Goodyear Reports All-Time Record Quarterly Sales, Earnings
28-10-2011 03:35:37 PM
- Third Quarter sales up 22% to $6.1 billion
- Price/mix improvement drove revenue per tire up 18% over last year
- Third Quarter segment operating income up 98% to $463 million
- Strong winter tire sales drove results in Europe, Middle East and Africa Tire
- On track for record full-year sales, segment operating income
AKRON, Ohio, October 28, 2011 – The Goodyear Tire & Rubber Company today reported that its third quarter 2011 sales and earnings were the best in its history. Quarterly net sales exceeded $6 billion for the first time ever.
“I’m very pleased with our performace,” said Richard J. Kramer, chairman and chief executive officer. “Our third quarter results are another step on the path toward our 2013 targets and especially meaningful given the challenging market conditions in much of the world,” he added.
“All four of our tire businesses set all-time quarterly sales records as our teams did an excellent job offsetting higher raw material costs with improved price/mix and selling new, innovative products in targeted market segments,” Kramer said.
“While our third quarter results are evidence of the fundamental improvements we have made to our business, we continue to see many opportunities to build on this success by driving efficient, standardized processes throughout our business.”
Goodyear's third quarter 2011 sales were $6.1 billion, up 22 percent from a year ago and the highest ever achieved by the company in any quarter. Tire unit volumes totaled 47.7 million, unchanged from 2010.
Third quarter sales reflect strong price/mix performance, which drove revenue per tire up 18 percent over the 2010 quarter, excluding the impact of foreign currency translation. Sales were also impacted by a $221 million increase in sales in other tire-related businesses, primarily chemical sales in North America, and favorable foreign currency translation of $175 million.
The company achieved segment operating income of $463 million in the third quarter, a record for any quarter. This was up $229 million from the year-ago period. Segment operating income for the third quarter of 2011 reflected improved price/mix of $739 million, which more than offset $554 million in higher raw material costs ($506 million net of raw material cost reduction actions).
Goodyear's third quarter 2011 net income available to common shareholders was $161 million (60 cents per share). This is the highest quarterly net income from Goodyear's continuing operations in its history. The company recorded a net loss of $20 million (8 cents per share) in the 2010 third quarter. All per share amounts are diluted.
The 2011 third quarter included total charges of $35 million (13 cents per share) due to rationalizations, asset write-offs and accelerated depreciation, and $4 million (1 cent per share) related to discrete tax charges; and a gain of $5 million (2 cents per share) on asset sales. All amounts are after taxes and minority interest.
See the table at the end of this release for a list of significant items impacting the 2011 and 2010 quarters.
Business Segment Results
See the note at the end of this release for further explanation and a segment operating income reconciliation table.
North American Tire Third Quarter Nine Months
(in millions) 2011 2010 2011 2010
Tire Units 16.6 18.0 49.4 49.8
Sales $2,557 $2,176 $7,275 $6,004
Segment Operating Income 78 5 255 7
Segment Operating Margin 3.1% 0.2% 3.5% 0.1%
North American Tire's third quarter 2011 sales increased 18 percent from last year to $2.6 billion, a record for any quarter. Sales reflect improved price/mix, which drove a 23 percent increase in revenue per tire, excluding the impact of foreign currency translation, compared to 2010's third quarter. Tire unit volumes decreased 8 percent. Original equipment unit volume was flat. Replacement tire shipments were down 10 percent, primarily reflecting weaker sales of low-value-added tires in the consumer tire business. Sales were positively impacted by $171 million from higher sales in other tire-related businesses, primarily third-party chemical sales, as well as $13 million in favorable foreign currency translation.
Third quarter 2011 segment operating income of $78 million was $73 million above the prior year. Improved price/mix of $262 million more than offset $214 million of higher raw material costs. Fixed cost recovery due to higher production levels contributed $18 million to segment operating income. Segment operating income also benefitted from a $17 million reduction in SAG expenses primarily related to lower general and product liability expense, $5 million in lower pension expense and higher sales in other tire-related businesses, while higher USW profit sharing expense was a partial offset.
Europe, Middle East and Africa Tire Third Quarter Nine Months
(in millions) 2011 2010 2011 2010
Tire Units 20.7 19.1 57.4 54.3
Sales $2,226 $1,696 $6,128 $4,680
Segment Operating Income 260 77 539 259
Segment Operating Margin 11.7% 4.5% 8.8% 5.5%
Europe, Middle East and Africa Tire's third quarter sales increased 31 percent from last year to $2.2 billion. Sales reflect an 8 percent increase in tire unit volume, strong price/mix performance and favorable foreign currency translation of $101 million. Original equipment unit volume was up 13 percent, primarily in the consumer tire business. Replacement tire shipments were up 7 percent, most notably due to strong winter tire sales. Third quarter revenue per tire increased 18 percent in 2011 compared to 2010, excluding the impact of foreign currency translation.
Third quarter 2011 segment operating income of $260 million was $183 million above the prior year and a record for any quarter. Improved price/mix of $327 million more than offset $169 million of higher raw material costs. Fixed cost recovery due to higher production levels contributed $22 million to segment operating income. The impact of favorable foreign currency translation contributed $7 million to segment operating income.
Latin American Tire Third Quarter Nine Months
(in millions) 2011 2010 2011 2010
Tire Units 5.1 5.2 15.0 15.5
Sales $651 $569 $1,876 $1,576
Segment Operating Income 62 95 183 237
Segment Operating Margin 9.5% 16.7% 9.8% 15.0%
Latin American Tire's third quarter sales increased 14 percent from last year to $651 million, a record for any quarter. Sales reflect strong price/mix performance and favorable foreign currency translation of $16 million. Tire unit volumes decreased 2 percent. Original equipment unit volume was down 4 percent. Replacement tire shipments were flat, primarily due to the impact of imported low-value consumer tires in Brazil. Third quarter revenue per tire increased 8 percent in 2011 compared to 2010, excluding the impact of foreign currency translation. Sales were positively impacted by $32 million from higher sales in other tire-related businesses. Sales were negatively impacted by $23 million resulting from the sale of the farm tire business in April 2011.
Third quarter segment operating income of $62 million was down $33 million from a year ago. Price/mix improvements of $67 million offset $64 million in raw material cost increases. Segment operating income was negatively impacted by $8 million resulting from the sale of the farm tire business, as well as the impact of inflation on wages and other costs, lower volume in Brazil and foreign currency translation. Segment operating income was positively impacted by cost saving initiatives.
Asia Pacific Tire Third Quarter Nine Months
(in millions) 2011 2010 2011 2010
Tire Units 5.3 5.4 15.6 15.9
Sales $628 $521 $1,805 $1,500
Segment Operating Income 63 57 195 190
Segment Operating Margin 10.0% 10.9% 10.8% 12.7%
Asia Pacific Tire's third quarter sales increased 21 percent from last year to $628 million, a record for any quarter. Sales reflect strong price/mix performance and favorable foreign currency translation of $45 million. Tire unit volumes decreased 2 percent. Original equipment unit volume was down 5 percent. Replacement tire shipments were flat as increased volumes in China were offset by declines in other countries. Third quarter revenue per tire increased 17 percent in 2011 compared to 2010, excluding the impact of foreign currency translation.
Third quarter segment operating income of $63 million was $6 million higher than last year. Improved price/mix of $83 million more than offset $59 million of higher raw material costs. Segment operating income was positively impacted by $6 million in foreign currency translation and negatively impacted by $13 million in costs related to the start up of a new manufacturing facility in China.
Year-to-Date Results
Goodyear's sales for the first nine months of 2011 were $17.1 billion, up 24 percent from $13.8 billion in the 2010 period. Sales reflect strong price/mix performance and the $129 million impact of a 1 percent improvement in tire unit volume, as well as a $718 million increase in sales in other tire-related businesses, primarily third-party chemical sales by North American Tire. Favorable currency translation increased sales by $648 million. The sale of the Latin American farm tire business negatively impacted sales by $48 million.
The company's year-to-date segment operating income of $1.2 billion was up 69 percent from $693 million last year. Compared to the prior year, year-to-date segment operating income reflects higher sales in all four of the company's business units and actions that reduced costs by $253 million.
Compared to the first nine months of 2010, 2011 segment operating income also benefitted from $1.7 billion in improved price/mix, which more than offset $1.2 billion in higher raw material costs. Raw material costs reflect $128 million in actions taken to reduce their impact.
Goodyear's year-to-date net income available to common shareholders of $303 million ($1.19 per share) compares to a net loss of $39 million (16 cents per share) in 2010's first nine months. All per share amounts are diluted.
