Goodyear Tyre & Rubber Co.’s first-quarter loss widened despite a 7% increase in sales, as the company’s operations were dragged down by poor results at its North American unit. The company reported a net loss of $163.3 million (93 cents per share) for the first quarter of 2003, compared with a net loss of $63.2 million (39 cents per share) in the first quarter of 2002.
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Goodyear said that six of the company’s seven businesses continued to perform well during the quarter, posting year-over-year improvement in segment operating income and profit margin. However, these results were not enough to fully offset a loss – $61.5 million – in the company’s North American Tyre business, charges related to rationalisation activities and an increased tax burden.
“While North American Tyre continues to struggle, we see room for optimism,” said Robert J. Keegan, Goodyear president and chief executive officer. “We are aggressively cutting costs to make this business competitive, and we are encouraged by market share gains in this unit compared to the fourth quarter of 2002. We have much work left to do, but our turnaround is on track.”
Goodyear reported sales of $3.5 billion for the first quarter of 2003, up 7.1 percent from $3.3 billion during the prior-year period. Tyre unit volume in the first quarter of 2003 was 52.6 million units, down from 53.0 million units in the 2002 period.
Revenues in the first quarter increased compared to the 2002 period primarily due to the impact of currency translation, which the company estimates at $139 million, and price increases. Lower tyre unit volume had a negative impact on sales.
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By GlobalDataNorth American Tyre’s (NAT) unit volume was down 5.2 percent compared to the first quarter of 2002. Shipments to original equipment customers decreased 2.7 percent in the 2003 first quarter. Replacement volume fell 6.4 percent compared to the prior-year period.
Goodyear said that NAT revenues for the 2003 first quarter decreased compared to last year due to industry weakness and reduced volume reflected in certain segments of the replacement market and units delivered in 2002 in connection with a Ford tyre replacement program. Unfavourable mix also had a negative impact on sales compared to 2002, according to Goodyear.
