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Goodyear profits inflate
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April 15, 1998: 10:45 a.m. ET
Despite slumping Asian sales, tire maker beats street by 3 cents in 1Q
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NEW YORK (CNNfn) - Goodyear Tire & Rubber Co. on Wednesday announced better-than-expected first-quarter earnings despite a 50 percent reduction in sales of original equipment in Asia and losses from unfavorable conversion rates of several overseas currencies.
Goodyear, based in Akron, Ohio, reported that net income rose 3.8 percent to $176.8 million, or $1.11 per diluted share, from $170.4 million, or $1.08 a share, in the comparable period a year ago.
Wall Street estimates had called for first- quarter earnings of $1.08 per share for Goodyear, the number-one maker of car and truck tires in the United States and third-ranked in the world, behind Michelin and Bridgestone.
Shares of Goodyear (GT) climbed 1/16 to 71-9/16 in early trading Wednesday on the New York York Stock Exchange.
The net figures included a $37.9 million gain, or 24 cents a share, from the sale of a latex plant and a $34.7 million, or 22-cent-per-share loss associated with discontinued operations from the sale of Goodyear's All American Pipeline system and related assets.
Without the non-recurring gains and losses, Goodyear's per-share diluted income rose 8.4 percent year-to-year, from $1.01 to $1.09.
Goodyear's worldwide sales volume slumped, dropping from $3.2 billion in the year-ago period to $3.1 billion. Domestic sales in both original equipment and replacement markets increased 2.2 percent, however.
In a statement, the company blamed "the severely depressed markets" in Asia for the sluggish overall sales.
"Our earnings improvement was achieved despite severe economic conditions in Asia and a challenging economic environment around the world," said Samir Gibara, Goodyear's chairman, president and chief executive officer.
Gibara credited the overall earnings improvement with lower raw material costs, and enhanced productivity. Gross margins rose to 24.7 percent from 23.5 percent in the 1997 first quarter.
Global capital expenditures were up as well over the year-ago period, at $118.3 million compared with $93.7 million in 1997. Total Asian sales declined 31 percent over the period, from $199.3 million to $137.5 million.
Goodyear operates more than 80 plants in the United States and abroad. It oversees more than 1,000 retail operations in the United States.
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Goodyear
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