Tire maker Goodyear rebounds to 4Q profit though demand from US automakers remains weak

Goodyear global sales offset rattled US automakers

CLEVELAND — Goodyear Tire & Rubber Co., helped by growing sales in emerging markets, reported a fourth-quarter profit Thursday that easily beat most expectations.

Even though sales remain weak in North America and Europe, the tire company based in Akron, Ohio, reported an 8 percent increase in volume due to growing global demand.

In Asia, Goodyear reported the volume of tires shipped to carmakers rose 36 percent, while North America recorded a decline of 7 percent.

The company said it earned $107 million, or 44 cents per share, on sales of $4.4 billion in the three-month period that ended Dec. 31. Goodyear lost $330 million, or $1.37 per share, on fourth-quarter 2008 sales of $4.1 billion.

After one-time charges, Goodyear earned 14 cents per share. Analysts expected, on average, a loss of 9 cents and Goodyear shares spiked 6 percent in early trading.

Sales have been dragged down for most of the year by the recession and the company reported losses in two of three earlier quarters.

For the year, Goodyear lost $375 million, or $1.55 per share, on sales of $16.3 billion, compared with a 2008 loss of $77 million, or 32 cents per share, on sales of $19.5 billion.

Quarterly results also were helped by improved margins, lower raw material expenses and cost-cutting. Goodyear reduced its work force by about 5,700 in 2009 to about 70,000.

Goodyear sales increased 7 percent over the fourth quarter of 2008 and the number of tires sold increased 8 percent.

Chairman and CEO Robert J. Keegan said there are signs of recovering demand.

“The degree of recovery, however, varies considerably by geography and product segment.”

Keegan highlighted Goodyear’s Asia prospects in a call with analysts. Asia was the only region in which Goodyear had improved earnings for both the fourth quarter and year.

“We are positioned well for profitable growth in Asia,” Keegan said. He said the company would pursue low-cost manufacturing operations overseas.

Keegan said the company, which had cut costs by $2.5 billion over the past four years, hopes to save another $1 billion over the next three years.

The key North American market improved with losses of $27 million, compared with a fourth-quarter 2008 loss of $193 million. North American sales fell from $1.9 billion to $1.8 billion but the number of tires sold was unchanged.

Company shares rose 40 cents, or 2.9 percent, to close Thursday at $14.30.

Goodyear has nearly 70,000 employees and has production facilities in 24 countries.

On the Net:

www.goodyear.com