Goodyear Reports First Quarter Financial Results

The Goodyear Tire & Rubber Company reported first quarter 2009 financial results and updated its progress on actions taken to address market and economic challenges around the world.

The company’s first quarter 2009 sales were $3.5 billion U.S., down from record sales of $4.9 billion U.S. in the 2008 quarter. Goodyear’s first quarter 2009 net loss was $333 U.S. million ($1.38 per share), compared with Goodyear net income of $147 million U.S. (60 cents per share) in the 2008 quarter. All per share amounts are diluted.

The quarter’s sales reflect the $766 million U.S. impact of a 20 per cent decline in tire unit volume due to significantly lower global industry demand. In addition, unfavorable currency translation reduced sales by $484 million U.S.. Sales benefited from price/mix improvements that drove revenue per tire, excluding the impact of foreign currency translation, up 3.4 per cent over the 2008 quarter despite a significant drop in commercial truck tire unit volume.

Goodyear’s segment operating loss of $176 million U.S. in the quarter reflects weak industry demand across all of its businesses resulting in a negative volume impact of $138 million U.S., under-absorbed fixed costs of approximately $200 million U.S. and declines in its other tire related businesses. Higher raw material costs, which increased 31 per cent, or approximately $332 million U.S., more than offset improved price/mix of $161 million U.S.

The 2009 quarter was also impacted by after-tax charges of $57 million U.S. (23 cents per share) due to rationalizations, asset write-offs and accelerated depreciation, and a gain of $9 million (4 cents per share) after minority interest primarily due to tax law changes.

“Our markets presented us with the challenges we expected in the first quarter, and in some cases more,” said Robert J. Keegan, chairman and chief executive officer. “While we aren’t satisfied with our results, they generally reflect the difficult market conditions. Our ongoing innovation played a significant role in driving our first quarter top line as we continued to take the right cost and cash actions to weather the economic downturn and position our company to rapidly take advantage of opportunities as the markets recover.”