Tire maker Goodyear reports 2Q earnings of $28M on global revenue boost, shares rise

Goodyear posts 2Q profit on global revenue boost

CLEVELAND — Goodyear Tire & Rubber Co. reported a $28 million second-quarter profit Thursday in contrast to a loss a year ago as demand for its tires increased worldwide, especially in the key U.S. market.

The biggest U.S. tire company and third largest globally said it sold more higher-end and Goodyear-branded tires and that more than offset higher materials costs.

But investors appeared concerned about less-favorable business conditions for Goodyear in the second half of 2010 and sent its shares down 68 cents, or 5.7 percent, to close at $11.27.

Goodyear, based in Akron, reported net income of 11 cents per share for the April-June quarter, in contrast to a net loss of $221 million, or 92 cents per share, a year ago.

Excluding charges, the company would have earned 12 cents a share, beating the Wall Street forecast of 5 cents.

Revenue rose 15 percent to $4.5 billion from $3.9 billion a year ago, led by a 21 percent gain in the core North American market.

The number of tires sold increased 10 percent in the quarter. The revenue jump was helped by a better mix of high-end tires and Goodyear branded-tires over lower-priced private label tires it produces.

Elsewhere, sales were up 21 percent in Latin America, 16 percent in Asia-Pacific and 5 percent in Europe-Middle East-Africa.

 ”Our businesses continue to perform better than a year ago as they capture the benefits of recovering industry demand, strong new product performance and solid productivity improvements,” Richard J. Kramer, president and CEO, said in a statement.

“We are clearly on the right path as our strategies position us to grow profitably as markets continue to improve.”

Saul Ludwig, an analyst with Northcoast Research in Cleveland, said the stock price drop reflected investor concerns about upcoming issues including raw material costs and less favorable currency. “The earnings were fine. They were better than most were looking for,” he said.

KeyBanc Capital Markets analyst Brett Hoselton noted the performance in Goodyear’s Europe-Middle East-Africa region was primarily driven by improved price mix.

Kramer told analysts in a conference call that the global economic recovery since January has been more robust than the company expected, particularly in North America and Europe. Still, uncertainties including government policies remain, he said.

“While we see global economies progressing, we remain mindful that consumer spending has not rebounded. Unemployment will remain high for an extended period of time,” he said.

For the first six months of the year, Goodyear reported a narrower loss of $19 million, or 8 cents per share, versus a loss of $554 million, or $2.30 per share, a year earlier.

Revenue rose to $8.8 billion from $7.5 billion a year ago as the recession hurt global markets.

Online: www.goodyear.com