Goodyear’s 1st-Qtr posts narrower loss due to currency devaluation charge, but revenue jumps

Goodyear loss narrows in 1Q, revenue climbs

CLEVELAND — Goodyear Tire & Rubber Co. reported sharply improved global sales Wednesday but charges led by a Venezuelan currency devaluation dragged it to a loss for the first quarter.

CEO Richard Kramer said as markets around the world improve, the Akron tire maker is seeing the benefits of its actions like launching new products during an economic downturn. Revenue jumped 21 percent.

Its shares traded as high as $15.27 but closed Wednesday at $13.82, down 23 cents or 1.6 percent. Goodyear shares have traded in a 52-week range of $9.63 to $18.84.

The pullback came after Kramer told analysts in a conference call that a key challenge will be rising rubber costs and uncertainties over the economic recovery.

The company remains optimistic but recognizes issues that might affect the global rebound, including unemployment levels in the United States and Europe and volatile consumer spending, Kramer said.

Goodyear reported that it lost $47 million, or 19 cents a share, in the quarter ended March 31. It lost $333 million, or $1.38 per share, a year ago.

Excluding the currency devaluation and other charges, Goodyear would have earned 18 cents a share. Analysts expected a 2 cent a share loss excluding charges.

Revenue rose to $4.3 billion from $3.6 billion. There were gains in all four of Goodyear’s global markets: 42 percent in Asia-Pacific, 25 percent in Latin America, 21 percent in Europe-Middle East-Africa and 15 percent in North America.

The number of tires sold in North America for new vehicles surged 45 percent over the same period in 2009, reflecting increased production and improving sales of big-ticket items including autos.

Kramer, who became president and CEO two weeks ago, said the company was focusing on developing new products, improving earnings in its key North American market and pushing growth in emerging markets.

“I am confident that our focus on these priorities will enable Goodyear to gain from the recovery in industry volumes and help us overcome the challenges before us, specifically higher raw material costs,” he said.

The industry can expect larger percentage growth rates in smaller, developing nations and smaller rates in bigger developed markets, Kramer said.

“We are only beginning to experience the explosion of new vehicles in the emerging markets, such as China,” he said.

Kramer said new product introductions would remain a key strategy for Goodyear, which introduced 62 last year and 17 in the first quarter of 2010.

Gimme Credit analyst Shelly Lombard said Goodyear, forced to wait for tires to wear out before having a replacement opportunity, has been able to wring more money from such sales with high-end offerings.

“What they’ve done a good job of is enticing people to spend more on tires, when it is time to replace them,” she said.

Higher costs leading to more expensive tires won’t deter people who only shop for tires every year or two, Lombard said. “It’s not going to be a huge deal for you. You will pay more for the tire,” she said.

Goodyear has more than 57 plants in 23 countries.

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