Goodyear Tyre & Rubber Co. reported its largest quarterly loss in more than 10 years on Thursday as the struggling tyre maker took a previously announced charge to write down the value of tax credits, Reuters reported.
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The news agency said the Akron, Ohio-based company reported a net loss for the 2002 fourth quarter of $US1.1 billion, or $6.30 a fully diluted share, compared with a year-ago net loss of $174.0 million, or $1.07 a share.
Before one-time items, the loss would have narrowed to about $35 million, or 20 cents a share, from $47.1 million, or 29 cents a share, last year, Reuters said, adding that sales rose 1.7% to $3.53 billion from $3.47 billion.
According to Reuters, the company cited improvement at its international tyre business and engineered products, but said business conditions and results in its North American tyre unit remain weak.
The North American tyre unit, Goodyear’s largest division, had an operating loss of $33.6 million for the quarter, compared to a year-earlier loss of $44.5 million, Reuters said.
“All four of our international tyre businesses achieved a higher profit margin compared to a year ago, with margins more than doubling in three of those businesses,” said Robert Keegan, Goodyear’s president and CEO, in a release cited by Reuters.
The news agency said Goodyear, as expected, took a non-cash charge of $1.1 billion, or $6.17 a share, for its tax credits. Such credits can only be used to offset taxes on profits and because Goodyear has lost money for the past two years, it assumes the credits are worth nothing. If the company starts making money again, it can reverse the charge.
According to Reuters, during the fourth quarter, Goodyear also had a gain of $11.1 million, or 6 cents a share, from asset sales and a gain of $1.4 million, or 1 cents a share, from previous restructuring efforts.
Reuters said the announcement came two days after Goodyear completed a new financing agreements of $3.3 billion, up from $2.94 billion –the latest of several steps Goodyear has taken to strengthen its balance sheet amid slow North American tyre demand and higher raw material prices.
The company recently put its profitable chemicals unit on sale, stopped paying a dividend for the first time since the Great Depression of the 1930s, and halted its contributions to employees’ 401(K) retirement accounts. It also has tried to improve its relationships with dealers, Reuters noted.
