Goodyear reports higher Q2 earnings on 24 percent sales growth
Second quarter segment operating income of $54 million was down $12 million from a year ago. Price/mix improvements of $56 million offset $54 million in raw material cost increases. Segment operating income was negatively impacted by $8 million resulting from the sale of the farm tire business, the impact of inflation on wages and other costs, and costs related to the ramp up of a manufacturing facility in Chile.
|Asia Pacific Tire|
|Second Quarter||Six Months|
|Sales||$ 626||$ 495||$ 1,177||$ 979|
|Segment Operating Income||65||64||132||133|
|Segment Operating Margin||10.4%||12.9%||11.2%||13.6%|
Asia Pacific Tire’s second quarter sales increased 27 percent from last year to $626 million, a record for any quarter. Sales reflect strong price/mix performance and favorable foreign currency translation of $63 million. Original equipment unit volume was down 10 percent, reflecting the impact of the natural disaster in Japan. Replacement tire shipments were up 3 percent. Second quarter revenue per tire increased 18 percent in 2011 compared to 2010, excluding the impact of foreign currency translation.
Second quarter segment operating income of $65 million was $1 million higher than last year. Improved price/mix of $83 million more than offset $61 million of higher raw material costs. Segment operating income was also impacted by $10 million in costs related to the planned start up of a new manufacturing facility in China.
Goodyear’s sales for the first six months of 2011 were $11 billion, up 25 percent from $8.8 billion in the 2010 period. Sales reflect improved price/mix and the $140 million impact of a 2 percent improvement in tire unit volume, as well as a $497 million increase in sales in other tire-related businesses, primarily third-party chemical sales by North American Tire. In addition, favorable currency translation increased sales by $473 million.
The company’s year-to-date segment operating income of $709 million was up 54 percent from last year. Compared to the prior year, year-to-date segment operating income reflects higher sales in all four of the company’s business units and actions that reduced costs by $147 million.
Compared to the first six months of 2010, the 2011 period also benefitted from $915 million in improved price/mix, which more than offset $733 million in higher raw material costs. Raw material costs reflect $80 million in actions taken to reduce their impact.
Goodyear’s year-to-date net income available to common shareholders of $143 million (57 cents per share) compares to a net loss of $19 million (8 cents per share) in 2010′s first half. All per share amounts are diluted.
Goodyear expects the global tire industry will continue to grow in 2011. In recognition of second quarter volume levels and a reduced outlook for the U.S. consumer replacement industry, the company now expects that its unit volumes for the year will increase at the lower end of its previously announced range of 3 percent to 5 percent.
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