Goodyear Tire Q2 Results Beat View; Reaffirms Full-year Outlook

(RTTNews) - Tire manufacturer Goodyear Tire & Rubber Co. (GT) on Wednesday reported a 10 percent decline in profit for the second quarter from last year on lower sales that were negatively impacted by unfavorable foreign currency translation. However, tire volumes rose 1 percent.

Both revenue and adjusted earnings per share for the quarter topped analysts' expectations, reflecting higher operating profits in North America and Asia Pacific. Looking ahead, the company reaffirmed its financial targets for 2015.

Richard Kramer, chairman and chief executive officer of Goodyear Tire said, "North America continued to lead the way with a 54 percent increase in segment operating income and a 16 percent segment operating margin driven by strong demand for our products. Additionally, three of our four businesses posted segment operating margins in excess of 10 percent."

The Akron, Ohio-based company reported second-quarter net income available to common shareholders of $192 million or $0.70 per share, down from $213 million or $0.76 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $229 million or $0.84 per share, compared to $225 million or $0.80 per share in the year-ago quarter.

On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $0.75 per share for the quarter. Analysts' estimates typically exclude special items.

The company noted that adjusted net income for the quarter was impacted by $79 million or $0.29 per share of U.S. tax expense following the release of the company's U.S. tax valuation allowance in the fourth quarter of 2014.

Net sales for the quarter declined 11 percent to $4.17 billion from $4.66 billion in the same quarter last year, largely attributable to unfavorable foreign currency translation of $401 million. Analysts had a consensus revenue estimate was $4.13 billion.

Global tire unit volumes totaled 40.8 million, up 1 percent from last year. Original equipment unit volume rose 4 percent, while replacement tire shipments declined 1 percent.

North American tire sales declined 1 percent from last year to $2.03 billion, and Latin American tire sales decreased 20 percent to $390 million from last year. Asia Pacific tire sales declined 10 percent to $491 million, and Europe, Middle East and Africa Tire sales decreased 20 percent to $1.27 billion.

Total segment operating margin for the quarter improved 340 basis points to 13.3 percent, driven by strong improvement in North America, Europe, Middle East and Africa, as well as Asia Pacific. Segment operating margin declined in Latin America.

North American segment operating income rose 54 percent from the prior year and was a record for any quarter. Asia Pacific segment operating income rose 11 percent.

The company's board declared a quarterly dividend of $0.06 per share, payable on September 1 to shareholders of record on July 31, 2015.

Looking ahead, the company reaffirmed its 2015-2016 financial targets, including segment operating income growth of between 10 percent and 15 percent per year.

GT is trading at $30.48, up $0.90 or 3.04 percent on a volume of 2.52 million shares.