Goodyear recorded a drop in sales, but increased net income and tire unit volumes during the first quarter, it said April 29.
The firm's sales came in at $4 billion for the quarter, down from $4.5 billion in 2014. Goodyear said it experienced a 2 percent increase in tire unit volumes to 40.8 million for the first quarter. Original equipment volume increased 3 percent while replacement shipments were up 2 percent.
Chairman and CEO Richard J. Kramer said in a statement the firm's volume growth gives Goodyear confidence in its outlook for the remainder of 2015.
Net income was reported at $236 million, up from a net loss of $38 million in 2014. The firm attributed the increase to a non-cash, one-time gain of $155 million ($99 million after taxes and minority interest) for the recognition of deferred royalty income resulting from the termination of a licensing agreement associated with its former Engineered Products business.
That business—which had operated independently as Veyance Technologies Inc.—was solid to Continental A.G.'s non-tire unit ContiTech A.G. in a $1.58 billion transaction that finalized in January.
“Our first quarter performance delivered record operating income of $391 million,” Kramer said on a conference call addressing the results. “Segment operating income grew 5 percent, which when adjusted for foreign exchange would have been 16 percent. It's a clear indication of the strength of our underlying business.”
Goodyear's North America unit led the way with $1.86 billion in sales, a slight decrease from the $1.88 billion it reported in 2014. Tire unit volumes increased to 14.8 million, up from 14.6 million. Both replacement and OE shipments increased 2 percent.
“By any measure, North America achieved one of its best quarters ever, including record segment operating income of $198 million,” Kramer said. According to the executive, this is the 23rd consecutive quarter of year-over-year earnings growth for the segment.
Its Europe, Middle East and Africa segment experienced a 21 percent decrease in sales and a 2 percent decline in tire unit volume, to $1.33 billion and 15.9 units. Replacement tire shipments dropped 1 percent with OE decreasing 2 percent.
Kramer said a weak Euro accounted for almost all of the firm's year-over-year decrease in segment operating income.
Sales declined 9 percent in Asia-Pacific to $450 million, however tire unit volumes increased to 5.7 million units, up 9 percent compared to 2014. OE unit volume increased 20 percent while replacement units remained flat.
“We saw strong growth driven mainly by our consumer businesses in both China and India,” Kramer said. “In particular, we saw very strong consumer OE growth in China as local manufacturers, both domestic and foreign, continued to develop their robust production and expansion plans both regionally and globally.”
Latin America experienced a 10 percent gain in tire unit volume, to 4.4 million units, but sales dropped 9 percent to $385 million. Kramer said the firm expects the Latin America region to remain volatile for the foreseeable future because of currency, economic and political instability “at levels not seen for years.”
However, the CEO said Goodyear remains optimistic about Latin America's long-term prospects, as evidenced by the firm's decision to service the region by investing at least $500 million in a new manufacturing plant to begin operations at San Luis Potosi, Mexico, in 2017.
Source: rubbernews.com
