Tyre maker Goodyear has set a full-year sales of over $20bn for first time but the recent three-month strike in the US reduced its net income by $367m.
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Goodyear’s fourth quarter 2006 sales were nearly $5bn, a 2% increase compared with the 2005 quarter excluding the impact of businesses divested in 2005.
The strong sales came despite an 8% decline in tyre volume, principally due to the 12-week strike in North America by the United Steelworkers and the company’s moves to exit segments of the private label tyre business. Sales benefited from improved pricing and product mix in the company’s international tyre businesses, all of which achieved sales records.
The company estimated that the strike at 16 North American facilities reduced fourth quarter 2006 sales by $363m and tyre volume by 2.8m units.
For the 2006 fourth quarter, Goodyear reported a net loss of $358m ($2.02 per share), including strike impact of an estimated $367m ($2.07 per share); $184m ($1.03 per share) in after-tax charges for rationalisation, including accelerated depreciation and asset write-offs principally related to plant closures; and a one-time gain of $153m (86 cents per share) related to the favourable resolution of a tax contingency.
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By GlobalDataThe company posted a net loss of $51m (29 cents per share) during the 2005 fourth quarter.
“We made outstanding progress in several key focus areas in 2006, in spite of the challenges from the strike, high raw material costs and difficult market dynamics. This allowed us to continue to grow our top line and deliver record results in several of our businesses while creating strong business platforms to carry Goodyear’s profitable growth into the future,” said chairman and chief executive officer Robert Keegan.
Improvements in pricing and product mix of approximately $210m offset raw material cost increases of an estimated $220m compared to the prior-year quarter. Revenue per tyre increased 5% compared to the fourth quarter of 2005.
The fourth quarter’s total segment operating loss was $105m in 2006, including a $361m impact of the strike. This compares to segment operating income of $226m in the 2005 period.
The European Union; Eastern Europe, Middle East and Africa; and Asia Pacific tire businesses each achieved fourth quarter segment operating income records.
Goodyear’s net sales for 2006 were a record $20.3bn, a 3% increase over 2005 despite a 5% decline in tyre unit volume.
The 2006 net loss was $330m ($1.86 per share), compared to net income of $228m ($1.16 per share), in 2005.
Segment operating income was $786m, including the strike impact, compared to $1.16bn in 2005.
The company estimates that the strike reduced 2006 sales by $363m, tyre volume by 2.8m units and net income by $367m.
In addition to the strike, full-year 2006 results include the impact of continued weak markets in North America, the company’s action to exit segments of the private label tyre business, and divestitures in 2005.
