Goodyear Tire & Rubber Q2 Profit More Than Doubles, Results Beat View

(RTTNews) - Tire manufacturer Goodyear Tire & Rubber Co. (GT) on Tuesday reported a profit for the second quarter that more than doubled from last year, as lower costs and expenses helped offset a decline in sales. Both revenue and adjusted earnings per share for the quarter beat analysts' estimates.

Looking ahead to fiscal 2013, Goodyear Tire now expects to attain segment operating income at the high end of its outlook range. Shares of the company are now gaining more than 8 percent in the regular trading session.

Goodyear noted that all four of its regional businesses posted higher earnings, with North America and Asia Pacific posting record operating income for any quarter. Three businesses posted higher tire unit volumes than last year.

Goodyear's segment operating income for the quarter rose 27 percent from the year-ago period to $428 million, reflecting favorable price/mix net of raw materials of $92 million, cost savings net of inflation of $38 million and $11 million in higher tire unit volumes. These were partly offset by unabsorbed overhead of $47 million resulting from lower production and $12 million in unfavorable foreign currency translation.

North American Tire sales for the second quarter declined 10 percent from last year to $2.20 billion, with a 3 percent decline in tire unit volume and lower price/mix and lower third party chemical sales.

Europe, Middle East and Africa Tire sales declined 1 percent to $1.6 billion, while tire unit volume increased 2 percent. However, Latin American Tire sales rose 6 percent to $531 million, while tire unit volume increased 4 percent.

Asia Pacific Tire sales decreased 3 percent from last year to $585 million. The results reflect a 5 percent increase in tire unit volume, offset by by reduced price/mix, $12 million in lower sales in other tire-related businesses and $10 million in unfavorable foreign currency translation.

Akron, Ohio-based Goodyear Tire's second-quarter net income available to common shareholders increased to $181 million or $0.67 per share from $85 million or $0.33 per share in the year-ago period.

Excluding items, adjusted earnings per share for the quarter were $0.76 per share. On average, seven analysts polled by Thomson Reuters expected the company to report earnings of $0.48 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter decreased 5 percent to $4.89 billion from $5.15 billion in the same period last year. Analysts had a consensus revenue estimate for the quarter of $4.88 billion.

The decline in sales reflect $35 million in higher tire unit volumes, more than offset by $131 million in lower sales in other tire-related businesses, $75 million in lower price/mix, and $60 million in unfavorable foreign currency translation.

Global tire unit volumes for the quarter were 39.5 million, up 1 percent year-on-year.

Looking ahead to fiscal 2013, Goodyear now expects global segment operating income to be about $1.5 billion, at the high end of its previously announced range of $1.4 billion to $1.5 billion.

Goodyear affirmed its outlook for tire unit volumes for the year to be essentially at 2012 levels.

In Tuesday's regular session, GT is trading at $18.51, up $1.47 or 8.66 percent on a volume of 6.49 million shares.