Goodyear reports Global Q1 results, reaffirms target

– Record first quarter Segment Operating Income of US$373 million, up 24%

– Record North America first quarter earnings of US$156 million, up 23%
– Europe, Middle East and Africa earnings of US$110 million, up US$79 million
– Venezuelan foreign currency charge drives Net Loss
– Company begins share repurchase programme, buys 850,000 shares in first quarter
– Company reaffirms 2014-2016 financial targets

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Bangkok, 7 May 2014 — The Goodyear Tire & Rubber Company reported higher Segment Operating Income for the first quarter of 2014 compared to the year-ago quarter.

Richard J. Kramer, chairman and chief executive officer.

Richard J. Kramer, chairman and chief executive officer.

“Our Segment Operating Income growth demonstrates our strategy is working and continues to deliver sustainable results. Despite the Venezuelan charge in the quarter, our operating results remained strong and in line with our expectations and we are reaffirming our 2014-2016 financial targets,” said Richard J. Kramer, chairman and chief executive officer.

“We delivered solid performance in our developed markets, led by North America, which reported a 23 percent increase in earnings. Growth in North America and Europe offset headwinds in emerging markets where we continue to navigate foreign currency and economic challenges,” he said.

Goodyear’s first quarter 2014 sales were US$4.5 billion, compared to US$4.9 billion a year ago. First quarter 2014 sales reflect US$202 million in lower sales in other tyre related businesses, most notably third party chemical sales in North America; US$126 million in unfavourable foreign currency translation; and US$98 million in lower price/mix, principally due to lower raw material costs, partially offset by US$44 million in higher tyre unit volumes.

Tyre unit volumes totalled 40 million, up 1 percent from 2013. Original equipment unit volume was down 2 percent. Replacement tyre shipments were up 3 percent.

“We remain confident in our full-year expectation of 2 percent to 3 percent year-over-year volume growth, despite the negative impact of severe January winter weather in North America and labour and economic disruptions in Venezuela during the quarter,” Kramer said.

Goodyear’s first quarter 2014 Net Loss Available to Common Shareholders was US$58 million (23 cents per share), driven by a US$132 million after-tax foreign currency exchange charge in Venezuela. Goodyear Net Income Available to Common Shareholders in the 2013 first quarter was US$26 million (10 cents per share). All per share amounts are presented on a fully diluted GAAP basis.

The company reported record Segment Operating Income of US$373 million in the first quarter of 2014. This was up 24 percent from the year-ago quarter, reflecting US$111 million in cost savings that more than offset inflation of US$75 million, lower unabsorbed overhead of US$48 million due to higher production levels and favourable price/mix net of raw materials of US$17 million (excluding raw material cost savings). These were partially offset by US$22 million of increased SAG expense and US$16 million in unfavourable foreign currency translation.

Consistent with historical seasonal trends, the company used cash in the first quarter. This use of cash was due to the normal timing of collections in Europe as well as higher inventory levels in North America to support sales growth in the second quarter. As a result, Free Cash Flow from Operations was a use of US$513 million for the first quarter of 2014.

See the note at the end for further explanation and reconciliation tables for Segment Operating Income; Free Cash Flow from Operations; and Adjusted Net Income (Loss) and Adjusted Diluted Earnings per Share, reflecting the impact of certain significant items and the April 1, 2014 conversion of the company’s mandatory convertible preferred stock.

First Quarter Business Segment Results

Asia Pacific

                                                   First Quarter

(in millions)                            2014                  2013

Tyre Units                                5.2                       5.1

Sales                                          US$492              US$567

Operating Income                   US$65                US$84

Operating Margin                    13.2%                  14.8%

Asia Pacific’s first quarter sales decreased 13 percent from last year to US$492 million. Sales reflect a 2 percent increase in tyre unit volume, which was more than offset by reduced price/mix, US$41 million in unfavourable foreign currency translation and US$6 million in lower sales in other tyre-related businesses. Original equipment unit volume remained flat. Replacement tyre shipments were up 3 percent.

First quarter Operating Income of US$65 million was down 23 percent from last year. Lower factory start-up costs of US$11 million positively impacted Operating Income. It was offset by US$8 million in unfavourable foreign currency translation; US$7 million in higher SAG expense, US$7 million in lower insurance recoveries and US$2 million in unfavourable price/mix net of raw materials.

About Goodyear 

Goodyear is one of the world’s largest tyre companies.  It employs approximately 69,000 people and manufactures its products in 52 facilities in 22 countries around the world.  Its two Innovation Centres 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.

[Source: Goodyear]

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