Goodyear Reports First Quarter Financial Results
AKRON, Ohio, April 29 Continued weak global industry demand, peak raw material costs impact results.
The Goodyear Tire & Rubber Company today reported first quarter 2009 financial results and updated its progress on actions taken to address market and economic challenges around the world.
"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."
2009 Actions Update
Top Line: Goodyear's 23 new product launches in the first quarter, of the more than 50 planned globally during 2009, are finding early success in the marketplace. In North America, Goodyear-brand market share increased during the first quarter in the consumer and commercial replacement markets.
"Based on the consumers' purchases and the resultant market share gains we have enjoyed with the Goodyear brand, it is evident that the markets are rewarding innovation - and innovation is the key cornerstone of our overall strategy," Keegan said.
Cost Actions: Goodyear made additional progress during the first quarter on its Four-Point Cost Savings Plan to achieve $2.5 billion in gross cost savings by the end of 2009. The company achieved $145 million in new savings during the quarter.
During the quarter, the company reduced its global work force by 3,800 associates, which will provide further cost savings in subsequent 2009 quarters.
Cash Initiatives: Goodyear made significant progress toward its goal of reducing inventory by more than $500 million during 2009. The company's total inventory is more than $300 million below the year-end 2008 level.
"Our actions are fully aligned with the strategy that has served us well over the past several years, a strategy guided by our intense focus on the Seven Strategic Drivers of our business," Keegan said. "Our future direction is not a new one. We firmly believe we are taking a proven strategic path to the next level of business performance."
First Quarter Results
The company's first quarter 2009 sales were $3.5 billion, down from record sales of $4.9 billion in the 2008 quarter. Goodyear's first quarter 2009 net loss was $333 million ($1.38 per share), compared with Goodyear net income of $147 million (60 cents per share) in the 2008 quarter. All per share amounts are diluted.
The quarter's sales reflect the $766 million impact of a 20 percent decline in tire unit volume due to significantly lower global industry demand. In addition, unfavorable currency translation reduced sales by $484 million. Sales benefited from price/mix improvements that drove revenue per tire, excluding the impact of foreign currency translation, up 3.4 percent over the 2008 quarter despite a significant drop in commercial truck tire unit volume.
Goodyear's segment operating loss of $176 million in the quarter reflects weak industry demand across all of its businesses resulting in a negative volume impact of $138 million, under-absorbed fixed costs of approximately $200 million and declines in its other tire related businesses. Higher raw material costs, which increased 31 percent, or approximately $332 million, more than offset improved price/mix of $161 million.
Selling, administrative and general expenses improved by $102 million compared to the 2008 quarter benefiting primarily from foreign currency translation and cost efficiencies.
The 2009 quarter was also impacted by after-tax charges of $57 million (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.
See the table at the end of this release for a list of significant items impacting the 2009 and 2008 quarters.
Business Segment Results
The company had a segment operating loss of $176 million in the first quarter of 2009, compared to segment operating income of $367 million in the year-ago quarter.