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Goodyear Tire & Rubber Co.'s (GT) second-quarter net income jumped 34% as double-digit international sales increases offset a slump in North America as auto makers reduced demand amid production cutbacks.

The tire maker posted net income of $75 million, or 31 cents a share, up from $56 million, or 26 cents, a year earlier. Excluding items, including a 36-cent charge from closing an Australian plant, earnings were 66 cents.

Revenue grew 6.5% to $5.24 billion from $4.92 billion.

Analysts polled by Thomson Reuters were looking for earnings of 60 cents on revenue of $5.27 billion.

The North American tire unit reported a 6% decrease in sales as auto makers such as General Motors Corp. (GM) and Ford Motor Co. (F) cut output due to falling sales of pickup truck and sport-utility vehicles.

International operations grew as Latin America posted a 25% increase in sales followed by Asia with a 20% jump and Europe with a 15% increase.

Goodyear has faced continuing pressure driven by the slumping U.S. economy which is causing customers to delay or skip new car purchases and auto makers subsequently ratchet back production.

Goodyear Chief Executive Robert Keegan said in April that auto maker tire demand was projected to fall 7% during the year instead of falling 2% to 4%.

Though Goodyear's stock has been in a free fall - dropping more than 45% since mid-May amid concerns over raw-material prices and slowing car production - analysts are upbeat on the firm. Calyon Securities' Mark Warnsman in a research note two weeks ago cited the strength of Goodyear's balance sheet, its ability to fund growth initiatives and their potential.

Goodyear has been preparing to increase its international presence while bolstering its dominance in the high-end-tire. It has also taken a hard-nosed approach, under Keegan, cutting high-cost operations, closing plants, selling non-core assets and pushing engineers to produce new products.

The tire maker in 2006 carried $12 billion in debt and retiree liability costs, an amount that is slated to fall to below $6.5 billion this year.

Goodyear shares closed Wednesday at $19.56.

-By Shirleen Dorman, Dow Jones Newswires; 201-938-2310; shirleen.dorman@ dowjones.com

-By Jeff Bennett, Dow Jones Newswires; 248-204-5542; jeff.bennett@dowjones.com

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  07-31-08 0834ET
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