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KUALA LUMPUR, 15 February 2008 – The Goodyear Tire & Rubber Company on February 14 reported record sales for the fourth quarter of 2007.
Goodyear’s fourth quarter 2007 sales were $5.2 billion, an 11 percent increase compared with the 2006 quarter, offsetting lower volumes with higher prices and a richer product mix. The company estimates that a 12-week strike at its North American facilities in 2006 reduced fourth quarter 2006 sales by $318 million.
Improved pricing and product mix drove revenue per tire up 10 percent over the 2006 quarter. Lower volumes reflect weak winter tire sale demand in Europe and the company’s exit from certain segments of the private label tire business in North America along with weak conditions in several key markets.
"Our fourth quarter results show significant gains as we drive sales of our higher-margin premium product lines,” said Robert J. Keegan, chairman and chief executive officer.
"This is especially true in our emerging markets businesses in Eastern Europe, Asia and Latin America. In aggregate, these three businesses grew sales 20 percent and segment operating income 41 percent in the quarter,” he said.
"Excluding the impact of the strike, North American Tire’s focus on innovative new products helped it achieve its highest full-year segment operating income since 2000,” he said. "Our new product engine will provide additional growth opportunities in 2008 and beyond.”
Goodyear made further progress during the fourth quarter on its plan to achieve $1.8 billion to $2 billion in gross cost savings by the end of 2009. "We have now achieved more than
$1 billion in savings in 2006 and 2007 and clearly remain on target to reach our four-year goal,” Keegan said.
"During 2007, we also made substantial progress on improving our balance sheet with net debt decreasing more than $2 billion,” he said. "We remain on track to achieve our next stage financial metrics, which include an 8 percent segment operating income return on sales globally, a 5 percent segment operating income return on sales in North America and a target of 2.5 times debt-to-EBITDA.”
Fourth quarter segment operating income was $313 million in 2007. This compares to a segment operating loss of $86 million in the strike-impacted 2006 period.
Segment operating income benefited from improved pricing and product mix of
$119 million in the fourth quarter of 2007, which more than offset increased raw material costs of $8 million.
Favorable foreign currency translation positively impacted sales by $315 million and segment operating income by $45 million in the quarter.
Gross margin was 19.4 percent for the 2007 quarter compared to 11.3 percent in last year’s strike-impacted quarter.
Fourth quarter 2007 income from continuing operations was $61 million (27 cents per share). This compares to a loss of $310 million ($1.74 per share) in the strike-impacted fourth quarter of 2006.
Including discontinued operations, Goodyear had fourth quarter net income of $52 million (23 cents per share), compared to a net loss of $358 million ($2.02 per share) last year. All per share amounts are diluted.
The 2007 fourth quarter included $26 million (11 cents per share) in after-tax rationalization and accelerated depreciation, after-tax losses on asset sales of $19 million
(8 cents per share), after-tax financing fees of $17 million (7 cents per share) related to debt conversion and reduced tax expense of $11 million (4 cents per share) due to a tax law change.
The 2006 fourth quarter included the strike impact of $313 million ($1.77 per share);
$184 million ($1.03 per share) in after-tax charges for rationalization, accelerated depreciation and asset write-offs principally related to plant closures; and a gain of $153 million (86 cents per share) related to the favorable resolution of a tax contingency.
All four of the company’s tire businesses outside of North America achieved all-time record sales during the 2007 fourth quarter.
Segment operating income for the Latin America, Asia Pacific and Eastern Europe, Middle East and Africa units were fourth quarter records.
Asia Pacific Tire
Asia Pacific Tire’s fourth quarter sales of $457 million were a record for any quarter, increasing 16 percent over 2006, driven by growth in China and India as well as improvements in pricing and product mix and higher volume.
Segment operating income of $39 million was a fourth quarter record and 50 percent higher than 2006 due to pricing and product mix improvements of $13 million as well as foreign currency translation. Raw material costs decreased approximately $3 million compared to the prior year.
"2007 was a banner year for Goodyear in Asia Pacific”, said Pierre E. Cohade, president, Asia Pacific Region. "As of the fourth quarter of 2007, we achieved 12 consecutive quarters of year-over-year sales and earnings growth marked with improved profitability, giving us a strong momentum as we charge ahead in 2008,” he said.
"Apart from our financial success, we received significant awards and recognition for the Goodyear brand as well as corporate social responsibility programs advocating safety in three areas – workplace safety, road safety, and environmental safety,” added Cohade. "All this would not have been possible without the support of our customers and the unrelenting efforts of our associates here in Asia, for which we thank them for.”
About Goodyear
Goodyear is one of the world’s largest tire companies. The company employs about 70,000 people and manufactures its products in more than 60 facilities in 26 countries around the world.
In Malaysia, Goodyear is the leading brand of choice for consumers and OE manufacturers, such as Mercedes Benz, Volvo, Honda, Mazda, Toyota, Nissan, Ford, Hyundai, Proton, Perodua, Naza, Hino, Daihatsu, Inokom, Malaysian Truck and Bus and Isuzu.
Goodyear has also the largest network of one stop professional auto and tire service centers in the country with nearly 300 Goodyear Servitekar outlets.
Goodyear Malaysia is the first Goodyear plant to be certified ISO9002 in 1992, QS9000 and ISO14001 in 2002, and ISO/TS16949 certification in 2003.
Recently, Goodyear was awarded the World’s Best Brands in the Automotive – Tire category by the Asia Pacific Brands Foundation.
For more information on Goodyear and its products, visit www.goodyear.com.
Certain information contained in this press release may constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. There are a variety of factors, many of which are beyond our control, which affect our operations, performance, business strategy and results and could cause our actual results and experience to differ materially from the assumptions, expectations and objectives expressed in any forward-looking statements. These factors include, but are not limited to: actions and initiatives taken by both current and potential competitors; increases in the prices paid for raw materials and energy; our ability to realize anticipated savings and operational benefits from our cost reduction initiatives or to implement successfully other strategic initiatives; whether or not the various contingencies and requirements are met for the establishment of a Voluntary Employees’ Beneficiary Association (VEBA) to provide healthcare benefits for current and future USW retirees; potential adverse consequences of litigation involving the company; pension plan funding obligations; as well as the effects of more general factors such as changes in general market or economic conditions or in legislation, regulation or public policy. Additional factors are discussed in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. In addition, any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.
For further inquiries please contact:
Caroline Chan
Manager, Marketing Communications
Goodyear Marketing & Sales Malaysia
Tel: (603) 5516 6456
Email: caroline_chan@goodyear.com |
Carol Wong
Ogilvy Public Relations Worldwide, Malaysia
Tel: (603) 2718 8258
E-mail: carol.wong@ogilvy.com |
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