Bloomberg News

Goodyear Drops as Profit Forecast Pared on Europe

February 12, 2013

Goodyear Drops as Profit Forecast Cut on Europe

Goodyear Tire & Rubber Co. said fourth-quarter sales fell 11 percent to $5.05 billion. Photographer: Daniel Acker/Bloomberg

Goodyear Tire & Rubber Co. (GT:US) fell less than a percent after the largest U.S. tiremaker said operating income this year would be lower than it originally forecast as it tries to repair its European operations.

Goodyear slipped (GT:US) 0.4 percent to $13.86 at the close in New York after plunging as much as 5.8 percent. The shares (GT:US) have risen 0.4 percent this year. Goodyear slid 2.5 percent in 2012, compared with a 13 percent gain for the Standard & Poor’s 500 Index.

Goodyear said in a statement it will earn $1.4 billion to $1.5 billion in operating income this year, compared with an earlier forecast of $1.6 billion as demand for tires slowed with auto production in Europe, which is in its worst auto-sales slump in 19 years. Automakers including General Motors Co. (GM:US) and Ford Motor Co. (F:US) have announced plans to close European plants.

The company said fourth-quarter sales fell 11 percent to $5.05 billion. The average of four analysts’ estimates was $5.34 billion. Tires sold in Goodyear’s North America region fell 10 percent to $2.31 billion. In the Europe, Middle East and Africa unit, sales decreased 16 percent to $1.6 billion, Goodyear said. The two regions comprised almost 80 percent of Goodyear’s revenue (GT:US) in 2011.

Plant Closing

Last month, Goodyear said it was closing its farm-tire plant in France, cutting 39 percent of its jobs in the country, amid labor disputes and lower demand. The closing and exiting of the farm-tire business in the region, will improve operating profit in the region by $75 million, Goodyear said in a U.S. regulatory filing Jan. 31.

Goodyear reported net income fell to $7 million, or break- even per share, compared with $18 million, or 7 cents, a year earlier, the Akron, Ohio-based company said in its statement. The per-share figure reflects dividends paid on preferred shares.

Excluding expenses to close the French factory and other one-time costs and gains, profit was 39 cents a share. The average estimate of eight analysts surveyed (GT:US) by Bloomberg was for a profit of 20 cents.

To contact the reporter on this story: Mark Clothier in Southfield, Michigan at mclothier@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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Companies Mentioned

  • GT
    (Goodyear Tire & Rubber Co/The)
    • $22.11 USD
    • -0.47
    • -2.15%
  • GM
    (General Motors Co)
    • $32.49 USD
    • 0.55
    • 1.69%
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