The Goodyear Tire & Rubber Company today reported higher net income for the second quarter of 2012 than a year ago.
"Three of our businesses increased year-over-year operating income and margins in a difficult economic environment," said Richard J. Kramer, chairman and chief executive officer. "Our improved ability to remain profitable through economic cycles is evident in our second quarter results and better positions us going forward given ongoing uncertainty in the global economic and policy environment," he added.
"Our $336 million of segment operating income is a strong performance given global tire volumes that are similar to those we saw at the depths of the 2009 recession when the company reported a segment operating loss," Kramer said. "It is clear evidence that our strategy is working."
"North American Tire continues to build on the structural improvements we've made to the business and has achieved year-over-year increases in operating income for 12 consecutive quarters," Kramer said. "The business is on track to achieve its 2013 target of $450 million in segment operating income this year, one year ahead of plan."
Kramer said recessionary economic conditions in Europe continue to have a negative impact on tire industry volumes in the region. "We are taking actions to manage our European business through this tough environment and ensure we are well positioned for continued growth in targeted market segments," he added.
"The long-term industry MegaTrends remain in place," Kramer said. "We expect global tire demand to recover and we remain committed to our 2013 target of $1.6 billion in segment operating income."
Goodyear's second quarter 2012 sales were $5.2 billion, down 8 percent from last year's record-setting total, reflecting weaker economic conditions and unfavorable foreign currency translation.
Sales reflect strong price/mix improvements, which drove revenue per tire up 8 percent over the 2011 quarter, excluding the impact of foreign currency translation. Unfavorable foreign currency translation reduced sales by 6 percent ($315 million).
Second quarter 2012 tire unit volumes totaled 39.2 million, down 9 percent from 2011, primarily reflecting weaker replacement industry volumes, most notably in Europe.
The company reported segment operating income of $336 million in the second quarter of 2012. This was down $46 million from the year-ago quarter. Segment operating income reflected lower tire volume and associated unabsorbed overhead, as well as unfavorable foreign currency translation. Improved price/mix of $313 million more than offset $238 million in higher raw material costs ($171 million net of raw material cost reduction actions).
Goodyear's second quarter 2012 net income available to common shareholders was $85 million (33 cents per share), up from $40 million (16 cents per share) in the 2011 quarter. All per share amounts are diluted.
The 2012 second quarter included total charges of $25 million (9 cents per share) due to rationalizations, asset write-offs and accelerated depreciation, debt financing fees of $24 million (9 cents per share) related to the refinancing of $3.2 billion in credit facilities, $20 million (7 cents per share) due to charges relating to labor claims with respect to a previously closed facility in Europe, $2 million (1 cent per share) due to discrete tax charges, and $2 million (1 cent per share) in costs related to tornado damage in 2011 at a manufacturing facility; and a gain of $10 million (3 cents per share) on asset sales. All amounts are after taxes and minority interest.
Source: Goodyear Tire & Rubber Company
Listen to a portion of Kramer's conference call to investors: