Goodyear 3-Q earnings up 51 per cent
CLEVELAND, USA
GOODYEAR Tire & Rubber Co’s third-quarter profit rose 51 per cent on strong performances in Latin America and North America, the tyre maker said yesterday.
But shares dropped 7.5 per cent in late morning trading as the company’s sales dropped 5 per cent, to below the level Wall Street expected.
Akron-based Goodyear said it earned US$166 million, or 62 cents per share, for the July-September period. Excluding charges, Goodyear earned 68 cents per share, beating the Wall Street estimate by one cent.
Revenue fell to US$5 billion from US$5.26 billion, hurt by a drop in chemical sales in North America and changes in the value of Asian currencies. Analysts polled by FactSet expected higher sales of US$5.27 billion.
Chairman and CEO Richard J Kramer said the company expects operating income for the year of more than US$1.5 billion. It had predicted US$1.4 billion to US$1.5 billion.
“As the industry continues to recover, we see strong volume growth in the segments we are targeting,” Kramer said in a statement.
Goodyear sold more tyres in North America and was aided by a shift in Latin America to higher-value replacement tires. Tyre sales rose about 1 per cent in North America, 3 per cent in Europe-Middle East-Africa and eight per cent in Asia-Pacific.
Latin America tyres sold fell four per cent, but operating income rose 82 per cent to US$89 million, helped by lower raw material costs.
The company had announced in September that it was reinstating its quarterly dividend after more than a decade. It is also starting a share buyback of up to US$100 million.
But, last week, Deutsche Bank downgraded its rating on Goodyear to “Hold” from “Buy” and lowered its target price on the stock to US$26 from US$29 based on concerns about margins over the next few years.
Goodyear shares dropped US$1.66 to US$20.39 in late morning trading. The stock had gained 60 per cent this year.