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Goodyear Swings to Loss

Restructuring charges hit the latest quarter.

Goodyear (GT) - Get Goodyear Tire & Rubber Company Report swung to a third-quarter loss despite what it called a record sales performance.

The Akron, Ohio, tiremaker lost $48 million, or 27 cents a share, for the quarter ended Sept. 30, reversing the year-ago profit of $142 million, or 70 cents a share. Sales rose to $5.28 billion from $5.03 billion a year earlier.

The latest quarter includes 71 cents a share in restructuring charges. The results also reflect higher raw material costs of $249 million, offset partially by $225 million of improved price/mix, and lower tire volume.

"Despite ongoing market weakness in North America and record-high raw material costs, we continue to demonstrate the strength of our business model changes and successful product portfolio," said CEO Robert J. Keegan.

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"After a challenging first half, our European Union business achieved year-over-year improvements in sales, units and segment operating income. Our key business strategies are also continuing to drive excellent results in the Asia Pacific, Latin America and Eastern Europe, Middle East and Africa tire businesses," he said.

"Although we are in the midst of a strike by the United Steelworkers in North America, we continue to work hard for a contract that is fair to all stakeholders and puts Goodyear on a level playing field with our competitors," Keegan said. "In the meantime, we are executing on our contingency plans to continue providing our customers with outstanding value, products and services."

Goodyear said it plans to publish the details of its latest union contract proposal on its negotiations Web site later today in order to more clearly communicate with its hourly associates. It also stated its bargaining team is returning to Cincinnati in the hopes USW representatives will return to discussions. Included in this proposal are provisions to protect employment levels at all tire manufacturing plants other than Tyler, Texas, which the company has announced the intention to close. Also included is a proposal to contribute $660 million to a Voluntary Employees Beneficiary Association (VEBA), an independent trust fund that would provide retiree health care benefits to USW members and would eliminate the portion of Goodyear's post-retirement health care obligations related to the USW workforce.