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Goodyear swings to 1Q profit, beats estimate
Friday - 4/26/2013, 8:20pm EDT
THOMAS J. SHEERAN
CLEVELAND (AP) -- Goodyear Tire & Rubber Co. reported a profit for the first quarter on Friday as lower raw material costs helped offset the effect of a decline in global tire sales.
Its adjusted earnings beat Wall Street estimates, and its shares rose more than 2 percent in morning trading.
"Our first quarter earnings demonstrate that our strategic focus on improving productivity and selling innovative products in targeted market segments where our brands add value is working, especially in North America, where our business continues to outperform expectations," said Richard J. Kramer, chairman and CEO.
The Akron, Ohio-based tire maker said its net income was $26 million, or 10 cents per share, in the three months ended March 31. It lost $11 million, or 5 cents per share, in the same quarter a year ago.
After charges, Goodyear earned 45 cents per share. Analysts surveyed by FactSet expected 30 cents per share.
Revenue fell to $4.8 billion from $5.5 billion a year ago. Analysts expected $5.09 billion.
Sales dropped 13 percent in Goodyear's core North America market, but also saw a $163 million reduction in raw material costs. Sales dropped 17 percent in Europe, 1.5 percent in Latin America and 1.7 percent in Asia.
Asia and Latin America had increased numbers of tires sold and higher operating income.
Despite an 8 percent decline in the number of tires sold globally, a push to sell high-end products helped Goodyear post record first-quarter operating income in North America and the Asia-Pacific region.
In its outlook, Goodyear said it expects the number of tires sold this year to be unchanged from 2012, reflecting weakness in Europe amid an uncertain economy.
To revive its European business, Goodyear has announced plans to leave the farm tire business and close a manufacturing plant in France, a move that has sparked a legal fight on two continents and street protests by French workers.
Kramer said the company remains confident in its full-year outlook. The company expects global segment operating income of $1.4 billion to $1.5 billion in 2013. Kramer noted that would be up more than 12 percent from 2012 and a record.
Goodyear shares fell 43 cents, or 3.3 percent, to close at $12.51 Friday. They are down 14.6 percent from $14.65 in January. They traded as low as $9.24 last June.
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