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Goodyear Blows Out Quarter

The company expects gains to slow in the fourth quarter.
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rolled past third-quarter estimates Thursday, posting what it called its strongest quarter in seven years.

The Akron, Ohio, tire shop earned $142 million, or 70 cents a share, up from the year-ago $38 million, or 20 cents a share. Sales rose to $5.03 billion from $4.7 billion a year earlier.

Latest-quarter results include an after-tax charge of $10 million, or 5 cents a share, related to Hurricanes Katrina and Rita, as well as an after-tax charge of $8 million, or 4 cents per share, for rationalizations. The quarter also included after-tax gains of $25 million, or 12 cents per share, related to the sale of the company's Wingtack adhesive resins business, and $14 million, or 7 cents per share, from an insurance settlement. Even so, the results handily surpassed the 38-cent Thomson First Call estimate.

The growth in sales reflects improved pricing and product mix in each of the company's businesses, higher volume in its international tire businesses, and the favorable impact of currency translation. Third-quarter tire unit volume increased to 58.4 million units, compared to 57.4 million units in the 2004 period, a 1.8% gain.

Goodyear said the effects of the hurricanes in North America have involved temporary reductions in production at its North American Tire facilities due to disruption in the supply of certain key raw materials. The company's tire plants returned to normal production levels in mid-October and its Beaumont, Texas, chemical plant is operating at near capacity. The continuing impact of the hurricanes could result in future raw material shortages, which could cause intermittent reductions in production, although none are expected at this time.

"I am extremely pleased with the way our Business Continuity team and our plant associates managed through the difficult circumstances surrounding Hurricane Rita," CEO Robert Keegan said. "Outstanding planning and execution helped minimize the financial impact and kept our products flowing to our customers."

Goodyear said it expects gains to moderate in the fourth quarter.