Second Quarter Highlights Include:
- Sales increased 6.5% to a record $5.2 billion
- Revenue per tire increased 9%
- Income from Continuing Operations up 159% to $75 million
- Segment operating income increased to $330 million
- International businesses' sales up 18%, segment operating income up 19%, both records
- Raised 4-point cost savings plan target to more than $2 billion
- Announced multi-year investment strategies to modernize facilities, increase high-value-added capacity and expand emerging markets businesses
AKRON, Ohio, July 31 /PRNewswire-FirstCall/ -- The Goodyear Tire & Rubber
Company (NYSE: GT) today reported record second quarter sales driven by the
performance of its international businesses.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050204/GTLOGO )
Goodyear's second quarter sales were a record $5.2 billion, up 6.5 percent
from last year due to improved pricing, a richer product mix and the impact of
favorable foreign currency translation, which offset lower volume in North
America and Europe. Also impacting results was the 2007 divestiture of the
company's T&WA tire mounting business, which had sales of $186 million in last
year's second quarter.
Revenue per tire, excluding the impact of foreign currency translation,
increased 9 percent over the 2007 quarter, reflecting worldwide gains in
pricing and product mix generated by the company's successful strategy to
focus on high-value-added tires. Year-over-year revenue per tire has
increased for 15 consecutive quarters.
The higher level of sales in 2008 reflects strong growth in Goodyear's
international businesses, which collectively increased sales 18 percent over
2007's second quarter and represented approximately 60 percent of total sales
in the quarter. This growth helped to offset lower sales in North American
Tire, which declined 6 percent. Compared to 2007, North American Tire's
second quarter unit volume was down 12 percent, reflecting the weak demand
environment. The decline was most notable in the consumer original equipment
market and in low-value-added segments of the consumer replacement market.
'Our strong second quarter and first half performance demonstrates the
successful execution of our strategies despite the significant economic
challenges we are facing, particularly in North America,' said Robert J.
Keegan, chairman and chief executive officer.
'Robust growth in our international operations, especially in emerging
markets, more than offset the continuing weakness in the North American
market. Our strategy to invest in emerging markets has resulted in a
profitable and growing set of businesses,' he said.
'We remain confident in our ability to manage through the challenging
near-term business conditions and are focused on maximizing business
performance given the environment,' Keegan added. 'At the same time, our
long-term investment strategy positions us to capitalize on available,
attractive market opportunities.'
Total segment operating income from continuing operations was $330
million, up 6.5 percent from the year-ago period, driven by significant
improvement in the company's international business units, each of which
achieved record second quarter results.
Improved pricing and product mix of approximately $249 million in the
second quarter more than offset increased raw material costs of approximately
$124 million.
Second quarter 2008 net income from continuing operations was $75 million
(31 cents per share). This compares to $29 million (14 cents per share) in
the year-ago quarter. Including discontinued operations, Goodyear had net
income of $56 million (26 cents per share) in the 2007 second quarter. All
per share amounts are diluted.
The 2008 quarter was impacted by after-tax rationalization and accelerated
depreciation costs of $87 million (36 cents per share) primarily related to
the planned closure of a tire plant in Australia. The second quarter of 2007
included after-tax debt retirement expenses of $45 million (20 cents per
share), rationalization and accelerated depreciation costs of $15 million (6
cents per share) and an out-of-period tax benefit to correct deferred taxes in
Colombia of $11 million (5 cents per share).
See the table at the end of this release for a list of significant items
impacting continuing operations from the 2008 and 2007 quarters.
Goodyear said it made additional progress during the second quarter on its
four-point cost savings plan and increased its target to more than $2 billion
in gross cost savings from 2006 through 2009. 'We have achieved more than
$1.4 billion in savings since beginning this plan and remain on target to
reach this higher level of savings,' Keegan said.
The company's strategy to drive profitable growth includes significant
plans to capitalize on worldwide increases in demand for its innovative, high-
value-added tires. The company also plans to build on its strength in
emerging markets in Latin America, Eastern Europe and Asia.
Business Segments
Segment operating income from continuing operations increased to $330
million representing the highest level ever achieved in a second quarter. All
three of the international businesses reported record second quarter segment
operating income, with Asia Pacific Tire setting a record for any quarter.
See the note at the end of this release for further explanation and a
segment operating income reconciliation table.
North American Tire Second Quarter Six Months
(in millions) 2008 2007 2008 2007
Tire Units 18.3 20.8 36.1 40.1
Sales $2,130 $2,276 $4,127 $4,293
Segment Operating Income 24 53 56 33
Segment Operating Margin 1.1% 2.3% 1.4% 0.8%
North American Tire's second quarter sales were down 6 percent compared to
the 2007 period. Impacting results was the 2007 divestiture of the company's
T&WA tire mounting business, which had sales of $186 million in the second
quarter of 2007. Also, tire volume declined by 2.5 million units reflecting
significantly weaker demand compared to last year, particularly in the
consumer original equipment market and in low-value-added segments of the
consumer replacement market. Sales in the 2008 quarter were positively
impacted by improved pricing and product mix, market share gains in Goodyear-
branded consumer replacement tires, and the success of the company's other
high-value-added tire lines.
Second quarter segment operating income was $24 million, down from the
2007 quarter as continued improvements in pricing, product mix and structural
costs were more than offset by the effects of market weakness, higher
inflation and costs related to modernizing factories and training new
manufacturing associates.
