Goodyear Swings To Profit As Revenue Rises

Filed at 5:35 p.m. ET

CLEVELAND (AP) Goodyear Tire & Rubber Co. said Friday that it swung to a profit in the first quarter by focusing on higher-priced tires and strong international markets. But the company says it will cut tire production in North America, where sales have been sluggish.

The results from Goodyear, the worlds third-largest tiremaker and No. 1 in the U.S., beat Wall Street expectations and its shares rose 6 percent.

Goodyear said it earned $147 million, or 60 cents per share, in the quarter that ended March 31, compared with a loss of $174 million, or 96 cents per share, in the same period in 2007. Sales rose to $4.94 billion from $4.5 billion a year ago.

Excluding one-time charges, Goodyear earned 67 cents per share from continuing operations.

Analysts surveyed by Thomson Financial had expected earnings of 47 cents per share. Such estimates usually exclude special items.

Goodyear shares rose $1.66 to $28.91 on Friday. They have traded in a range of $22.27 to $36.90 in the past year.

Chairman and Chief Executive Robert J. Keegan said the results demonstrate success in emphasizing higher-margin premium product lines, reducing costs and paying down debt.

While few businesses are immune to the effects of a weaker U.S. economy, and we have certainly experienced weaker conditions in our industry particularly in the OE (original equipment) business, we continue to be confident about the attractive market opportunities we see and our companys ability to fully capitalize on them, Keegan said in a conference call with analysts.

North American tire sales fell 1 percent, but Goodyear recorded an operating profit in the quarter compared with a loss from a year ago, helped by improved pricing and a better product mix.

Keegan told analysts the company wants to reduce inventory in North America and tire production by about 5,000 tires over the course of this year. Goodyear did not disclose where or when the cutbacks will occur or if jobs may be affected.

A Goldman Sachs research report on Friday said sluggish North American volumes and rising raw materials costs will be a challenge for Akron-based Goodyear this year, while it could benefit from international operations and a weakening dollar.

Cooper Tire & Rubber Co. warned on Friday that its first-quarter earnings would be well below Wall Street estimates, nothing that customers in North America are driving fewer miles because of the economic slowdown and are delaying tire purchases. The company, based in Findlay, also blamed raw materials costs and higher charges for product liability claims.

At Goodyear, all three of its business segments outside North America notched sales gains. In Europe, the Middle East and Africa the increase was 16 percent over last year, in Latin America sales increased 29 percent and Asia-Pacific was up 21 percent.

About 60 percent of Goodyears revenue came from outside North America, Keegan said.

The loss a year ago was due in part to costs from a United Steelworkers strike. There were also large costs as Goodyear prepared to divest some assets and make changes to salaried workers benefits.

Goodyear has about 70,000 employees and makes products in more than 60 factories in 26 countries.

On the Net:

www.goodyear.com/corporate

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