reported quarterly results that were below analysts' expectations as demand for tires fell, and the company set plans to cut 3,500 additional jobs this year to reduce costs.
The stock was lately trading up $1.60, or 7.5%, to $23 on optimism the company will restore profitability. Goodyear reported a fourth-quarter loss of $47.1 million, or 29 cents a share, excluding various adjustments, compared with a loss of $16.5 million, or 11 cents a share, in the year-ago period. The consensus estimate called for the tire manufacturer to lose 28 cents.
"Depressed economic conditions, continued weak demand around the world, and the cost of reducing production to align inventory levels accordingly had a significant impact on our results," Sam Gibara, the chief executive of Goodyear, said in a written statement.
In the fourth quarter, tire volume was down 6.8% from 2000 levels, with volume for replacement tires off 9.2%. Sales fell 1.5% to $3.4 billion in the quarter. For the year, tire volume was down 3.5%, but replacement volume was up 0.2%.
Goodyear lost $203.6 million, or $1.27 a share, in 2001, reversing a profit of $63 million, or 40 cents a share, the previous year. Net sales for the year fell 1.9% to $14.1 billion.
The company said it will continue raising prices and cutting costs, as it did in 2001. The company also plans new products and said it is negotiating with automakers on whether to continue certain lines that aren't making enough money.
"I think they left people comfortable with a plan that makes sense," said Wendy Needham, an analyst at Credit Suisse First Boston. "But like any strategy, it still has to be executed." Needham expects Goodyear to turn a profit in the second quarter, but she cautioned that the prospect of earnings was likely already priced into the stock.
Goodyear set plans to cut 3,500 jobs, or about 3.6% of its total workforce. The layoffs include 1,300 workers in Australia, where Goodyear is closing two plants, with the rest coming from other facilities.
Last year, the company eliminated 10,000 jobs to bring costs in line with demand. Reducing inventory levels through production cutbacks relative to 2000 levels resulted in about $320 million of unabsorbed costs during the year, including $150 million in the fourth quarter, Goodyear said. During 2001, Goodyear reduced its net debt by $700 million, and had cost savings of $150 million.