For the third quarter of 2011, Goodyear Tire & Rubber Co. reported the best sales and earnings in history, with a net income of $168 million, or $0.60 per share, compared to the $20 million loss during the same period of 2010.
Apart from a good price strategy which ensured excellent coverage of higher raw material costs, these results was attributed to increased demand for winter-tire in Europe and for premium-price tires in the U.S.
Richard J. Kramer, CEO of Goodyear, said:
“I am very pleased with our performance. Our third quarter results are another step on the path toward our 2013 targets and especially meaningful given the challenging market conditions in much of the world. (…)
All four of our tire businesses set all-time quarterly sales records as our teams did an excellent job offsetting higher raw material costs with improved price/mix and selling new, innovative products in targeted market segments”.
Revenue rose 22% to $6.06 billion from last year’s $4.96 billion. The total sales counted 47.7 million tires, almost the same as last year. But through its focus of selling more profitable premium tires, Goodyear managed to obtain a nice profit and also to counterbalance the $552 million increase in raw material costs it experienced in the quarter.
The final result was also influenced by the food results of company’s Europe, Middle East and Africa division, where sales grew to $2.2 billion from $1.7 billion and operating profit was $260 million compared with $77 million in 2010. This situation was generated by the large stocks of winter tires made by European dealers.
In North America, its largest market, Goodyear business decrease by 8 percent as it sold 16.6 million tires or about 1.4 million tires less than the third quarter of 2010. Nevertheless, the high-end tires determined $2.56 billion in sales (+18% compared to 2010) and an operating income of $78 million compared with $5 million last year.
Goodyear’s final results were 72 cents per share, exceeding the Wall Street forecast of 23 cents, after excluding one time items like $35 million (13 cents per share), of charges for rationalizations, asset write-offs and accelerated depreciation, $4 million (1 cents per share) for discrete tax charges, and a gain on asset sales of $5 million ( 2 cents per share).