Goodyear Tire & Rubber Company’s third-quarter net income and revenue dropped on lower tire sales in Europe, causing shares to fall more than 10 percent on Friday.
Problems in Europe offset Goodyear’s cost cuts and profits in North America, with executives saying additional cuts are on the way because of economic uncertainty. Goodyear reported net income of $110 million, or 41 cents per share, for the three months ending September 30, down from $161 million, or 60 cents per share the same quarter last year. Revenue fell 13 percent to $5.26 billion as the slowing European economy cut tire sales, although analysts expected $5.87 billion.
Goodyear chairman and CEO Richard J. Kramer said the company still expects $1.6 billion in segment operating income and positive cash flow in 2013. But he added the company will have to rely more heavily on North America and less on international operations than previously planned. It means more cost cuts are coming, especially in Europe and Latin America, in order to improve results.
According to Goodyear chief financial officer Darren G. Wells, the tire maker will study manufacturing costs, particularly in Europe. Goodyear said operating income in its North American tire business rose 67 percent to $130 million, even though it sold fewer tires. But income in Europe, the Middle East and Africa dropped almost 60 percent to $105 million. Operating income also fell in Latin America but rose slightly in the company’s Asia Pacific region.