Goodyear Reports Fourth Quarter, Full Year Results for 2010
The Goodyear Tire & Rubber Company has reported fourth quarter and full-year 2010 results with quarterly segment operating income of $224 million driving full-year segment operating income of more than $900 million.
“I’m very pleased with Goodyear’s performance in the fourth quarter and the full year of 2010. Our operating results reflect significant recovery, with improvement across all of our businesses versus last year despite escalating raw material costs,” said Richard J. Kramer, Chairman and Chief Executive Officer.
“The percentage of new products in our overall lineup is the highest ever and is driving record revenue per tyre increases and continued success in targeted markets,” he added.
“Our selective approach to the business continues to present strong profit growth opportunities. Goodyear’s leading brands and technology offer customers in targeted segments with an outstanding value proposition,” Kramer said.
“We also remain firmly committed to improving our competitiveness and, as a result, have announced plans to close our Union City, Tenn. plant.”
Goodyear’s fourth quarter 2010 sales were $5.1 billion, up 14 percent from the 2009 quarter. Tyre unit volumes totaled 45 million, up 4 percent from 2009.
Fourth Quarter Results
Fourth quarter sales reflect the $130 million impact of the increase in volume. Sales benefited from record price/mix improvements, which drove revenue per tyre, excluding the impact of foreign currency translation, up 12 percent over the 2009 quarter. Sales were also impacted positively by a $159 million increase in sales in other tyre-related businesses, primarily third-party chemical sales in North America. Unfavorable foreign currency translation reduced sales by $111 million.
The company had segment operating income of $224 million in the fourth quarter of 2010, down $25 million from the year-ago quarter. Segment operating income reflected improved price/mix of $315 million and the benefits of higher volume, offset by $430 million in higher raw material costs ($397 million net of raw material cost reduction actions). Unfavorable foreign currency translation reduced segment operating income by $17 million. Actions to reduce costs provided a $119 million benefit.
The 2010 fourth quarter included total charges of $213 million (87 cents per share) due to rationalizations, asset write-offs and accelerated depreciation, $20 million (8 cents per share) related to the elimination of the subsidized essential goods exchange rate in Venezuela, and a charge of $18 million (7 cents per share) related to a claim regarding the use of value-added tax credits in prior periods; and gains of $31 million (13 cents per share) on asset sales, primarily in Asia, and $22 million (9 cents per share) related to net tax benefits primarily due to tax law changes in the U.S. and other countries. All amounts are after taxes and minority interest.
Goodyear’s fourth quarter 2010 net loss was $177 million (73 cents per share), compared with net income of $107 million (44 cents per share) in the 2009 quarter. All per share amounts are diluted.
Asia Pacific Tyres
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Asia Pacific Tire’s fourth quarter sales increased 16 percent from last year to $562 million, which were the highest ever achieved in any quarter. Sales reflect a 5 percent increase in tyre unit volume. Original equipment unit volume increased 12 percent. Replacement tyre shipments were up 1 percent. Fourth quarter revenue per tire, excluding the impact of foreign currency translation, increased 6 percent in 2010 compared to 2009. Favorable foreign currency translation increased sales by $32 million.
Fourth quarter segment operating income of $60 million was $10 million lower than last year. The 2010 quarter was positively impacted by improved price/mix of $38 million and higher volume. Raw material costs increased $45 million over last year. Favorable foreign currency translation increased segment operating income by $5 million. Costs related to the planned start up of a new factory in China negatively impacted segment operating income by $5 million.
“We are excited to have achieved another record breaking sales and earnings performance in the year 2010 for Goodyear in Asia,” said Pierre E. Cohade, President of Goodyear Asia Pacific. “The growth momentum that we have built in the region over the past 12 months, fueled particularly by China and in India, is a clear affirmation that our focus on driving innovations in our product portfolio while strengthening the Goodyear brand and our branded distribution network is paying strong dividends,” he said.
“Third party awards and recognitions are the best proof points of our strategy, and in 2010 we garnered 13 top awards for our new products, several citations for our brand and various marketing initiatives, a first-ever recognition for our retail brand and even a prestigious Best Employer award in China,” said Cohade. “To win in Asia, you need winning products, a winning brand, winning stores and above all, a winning organization that attracts and retains the best talent in the industry. I wish to thank all of our highly dedicated associates and business partners for giving us a record breaking year in all fronts.”
Full-Year Results
Goodyear’s annual sales for 2010 were $18.8 billion, up 16 percent from $16.3 billion in the 2009 period. Sales reflect the $1 billion impact of an 8 percent improvement in tyre unit volume as well as a $582 million increase in sales in other tyre-related businesses, primarily third-party chemical sales by North American Tire. Sales also reflect price/mix improvements and unfavorable currency translation. Revenue per tire, excluding the impact of foreign currency translation, increased 6 percent over 2009.
The company’s 2010 segment operating income of $917 million is up from $372 million in 2009 reflecting improved profitability in all four of the company’s business units. Compared to the prior year, 2010 segment operating income reflects higher sales, actions that reduced costs by $467 million and a significant recovery in under-absorbed fixed costs. These improvements more than offset higher marketing costs in support of the company’s brands and emerging market growth, wage inflation and foreign currency translation.
Compared to 2009, improved price/mix of $689 million offset $685 million in higher raw material costs ($549 million net of raw material cost reduction actions).
Goodyear’s 2010 net loss of $216 million (89 cents per share) compares to a net loss of $375 million ($1.55 per share) in 2009. All per share amounts are diluted.
Goodyear is one of the world’s largest tire companies. It employs approximately 72,000 people and manufactures its products in 56 facilities in 22 countries around the world. Its two Innovation Centers in Akron, Ohio and Colmar-Berg, Luxembourg strive to develop state-of-the-art products and services that set the technology and performance standard for the industry.
