Goodyear Tire Q3 Profit Top View, But Revenue Miss; Shares Up 4%

(RTTNews) - Tire manufacturer Goodyear Tire & Rubber Co. (GT) reported Wednesday a profit for the third quarter that increased from last year, despite a sales drop, reflecting higher charges and a revenue decline. Tire volumes declined 2 percent.

Adjusted earnings per share topped analysts' expectations, while quarterly revenues missed their estimates. Following the announcement, the company's shares are trading higher by nearly four percent in early deals.

"We delivered outstanding earnings growth in the quarter and achieved a segment operating income margin of more than 11 percent, the highest in more than a decade, despite an increasingly challenged global economy," Chairman and CEO Richard Kramer said in a statement.

The Akron, Ohio-based company reported net income of $161 million or $0.58 per share for the third quarter, lower than $166 million or $0.62 per share in the prior-year quarter.

Results for the latest quarter include net charges of $0.29 per share, while th eyear-ago quarter included $0.06 per share of the same.

Excluding items, adjusted net income for the quarter was $242 million or $0.87 per share, compared to $190 million or $0.68 per share in the year-ago quarter.

On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $0.70 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter declined to $4.66 billion from a record $5.0 billion in the same quarter last year, and missed seven Wall Street analysts' consensus estimate of $4.93 billion. Sales were negatively impacted by $137 million in unfavorable foreign currency translation.

Global tire unit volumes totaled 41.9 million, down 2 percent from last year, with original equipment unit volume decreasing 3 percent, and replacement tire shipments edging down 1 percent.

North American Tire sales declined 6 percent from last year to $2.06 billion, and Latin American Tire sales dropped 14 percent to $451 million from last year. Asia Pacific Tire sales edged down 1 percent to $531 million, and Europe, Middle East and Africa Tire sales decreased 8 percent to $1.62 billion from last year.

Total segment operating margin for the quarter improved 260 basis points to 11.2 percent, driven by significant improvement in North America, Europe, Middle East and Africa, as well as Asia Pacific.

United States and Foreign Taxes for the quarter increased to $100 million from $54 million last year.

Further, the company's board declared a quarterly dividend of $0.06 per share, payable on December 1 to shareholders of record on October 31, 2014.

Looking ahead to the fiscal years 2014 to 2016, Goodyear continues to expect segment operating income growth near the high end of the 10 to 15 percent range per year. The company also projects unit volumes to be flat to up 1 percent for 2014 over 2013.

Further, the company said it plans to acquire up to $150 million of its common stock in fourth quarter.

"These results reflect our focus on capturing the value of our branded products in the marketplace and continued progress generating cost savings through our operational excellence activities," Kramer added.

In Wednesday's regular trading session, GT is currently trading at $20.75, up $0.84 or 3.83% on a volume of 5.80 million shares.