The Goodyear Tire & Rubber Company reported record sales for the first quarter of 2012; US$5.5 billion in total sales
<!--more-->Goodyear’s first quarter 2012 sales were $5.5 billion, up 2% from the 2011 quarter and a first quarter record. Tire unit volumes totaled 43 million, down 8% from 2011, reflecting weak industry demand in many markets. This compares to first quarter 2011 volumes that were up almost 7% from 2010.
Richard J. Kramer, chairman and chief executive officer had this to say: “I’m pleased with our results as our businesses posted solid operating income. Our teams delivered these results in the face of a difficult volume environment and high raw material costs, with a strong focus on price/mix. Favorable results in North America, in spite of the weak industry environment, are a clear indication of our success in delivering innovation, targeting profitable market segments and driving operational excellence. As expected, Europe, Middle East & Africa’s results were affected by weak economic conditions, which remain uncertain and warm winter weather. Our first quarter results demonstrated a consistent focus on our global Strategy Roadmap. We have positive momentum and I remain confident that we will reach our 2013 targets.”
First quarter sales reflect strong price/mix performance, which drove revenue per tire up 16% year-over-year, excluding the impact of foreign currency translation. Unfavorable unit volume and foreign currency translation reduced sales by $345 million and $108 million, respectively.
The company had segment operating income of $292 million in the first quarter of 2012, down $35 million from the year-ago quarter. Segment operating income reflected improved price/mix of $525 million, which more than offset $482 million in higher raw material costs ($420 million net of raw material cost reduction actions).
Segment operating income was negatively impacted by $54 million in lower volume and higher under-absorbed fixed costs of approximately $6 million. Cost inflation along with inefficiencies related to a plant closing in North America and poor productivity at factories in France more than offset the benefit of cost saving programs.
Goodyear’s first quarter 2012 net loss available to common shareholders was $11 million (5 cents per share), compared with net income of $103 million (42 cents per share) in the 2011 quarter. All per share amounts are diluted.
The 2012 first quarter included $86 million (35 cents per share) in charges resulting from the early redemption of senior notes; $14 million (6 cents per share) in rationalizations, asset write-offs and accelerated depreciation; $3 million (1 cent per share) in discrete tax charges; and gains of $5 million (2 cents per share) from the net impact of insurance recoveries related to the Thailand flood and $3 million (1 cent per share) from asset sales. All amounts are after taxes and minority interest.
Asia Pacific Tire’s first quarter sales increased 5% from last year to $577 million, a first quarter record. Original equipment unit volume was up 7% . Replacement tire shipments were down 11%. The impact of flooding in Thailand and softer consumer replacement demand in many parts of Asia more than offset growth in China. Revenue per tire increased 9% in 2012 compared to 2011, excluding the impact of foreign currency translation. Favorable foreign currency translation increased sales by $7 million.
First quarter segment operating income of $67 million was even with last year. The 2012 quarter was impacted by improved price/mix of $29 million, which more than offset $22 million of higher raw material costs. Segment operating income was also impacted by $7 million in costs related to the planned start up of a new factory in China.
Insurance recoveries offset costs resulting from the temporary closure of the company’s factory in Thailand due to flooding. The net impact on Asia Pacific Tire’s first quarter segment operating income was $3 million favorable. The factory has resumed production and is expected to return to full operating levels in the second quarter of 2012, improving the supply of both aviation and passenger tires.
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