Goodyear Tire Q3 Profit Tops View, But Revenues Miss; Shares Down 8%

(RTTNews) - Tire manufacturer Goodyear Tire & Rubber Co. (GT) reported Tuesday a profit for the third quarter that increased from last year, despite a sales drop, reflecting quarterly earnings improvement across its four businesses and tire unit volume growth in three businesses.

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

"Our third quarter results, announced just weeks after our recent Investor Day, demonstrate continued sustainable earnings growth and the type of disciplined execution needed to deliver on our targets in 2013 and beyond," Chairman and CEO Richard Kramer said in a statement.

The Akron, Ohio-based company reported net income of $166 million or $0.62 per share for the third quarter, higher than $110 million or $0.41 per share in the prior-year quarter.

The results for the latest quarter include charges of $0.07 per share, due to rationalizations, asset write-offs and accelerated depreciation and gains of $0.01 per share on asset sales, while the year-ago quarter also included net $0.12 per share of the same charges.

Excluding items, adjusted net income for the quarter would have been $0.68 per share, compared to $0.53 per share in the year-ago quarter.

On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $0.67 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter declined to $5.00 billion from a record $5.26 billion in the same quarter last year, and missed five Wall Street analysts' consensus estimate of $5.27 billion.

Sales reflected $82 million in higher tire unit volumes, more than offset by $178 million lower sales in other tire-related businesses such as the third party chemical sales in North America. Global tire unit volumes totaled 42.6 million, up 2 percent from last year.

North American Tire sales declined 9 percent from last year to $2.19 billion, while Latin American Tire sales edged up 1 percent to $527 million from last year. Asia Pacific Tire sales decreased to $537 million from last year's $592 million, while Europe, Middle East and Africa Tire sales edged up to $1.752 billion from last year's $1.748 billion.

Goodyear noted that all four of its regional businesses achieved higher operating income in the quarter compared to the year-ago period, with North America posting record third quarter operating income. Three businesses posted higher tire unit volumes than last year.

Looking ahead to the fiscal 2013, Goodyear expects record segment operating income of more than $1.5 billion, and continue to target 10 to 15 percent annual growth in segment operating income through 2016. The company also continues to target positive cash flow, excluding pension pre-funding, through 2016.

"As the industry continues to recover, we see strong volume growth in the segments we are targeting," he added. "While we continue to be disciplined in our approach, we are seeing growth in unit volumes, including in our North America business, driven by the Goodyear brand," Kramer added.

In Tuesday's regular trading session, GT is currently trading at $20.34, down $1.71 or 7.75% on a volume of 9.87 million shares.