Even as its critical North American Tire division soundly beat its profit goal a year ahead of schedule, Goodyear says its finances in 2013 won’t be as strong as company executives previously forecast.
The Akron tire maker on Tuesday lowered its earnings outlook for the current fiscal year as it reported fourth-quarter and full-year earnings for 2012.
In large part because of ongoing headwinds from Europe, Goodyear now expects to earn between $1.4 billion and $1.5 billion this year, down from a previous forecast of $1.6 billion. The revised earnings would be an increase of 12 percent over 2012 and represent record levels for Goodyear, said Rich Kramer, chairman and chief executive officer.
Executives also announced the company is implementing a strategy to “pre-fund” and “de-risk” its significant pension obligations.
Part of the plan involves using debt financing to raise funds for accelerated pension contributions, the company said. As of the end of 2012, Goodyear said its unfunded pension obligations rose to $3.5 billion from $3.1 billion at the end of 2011. The company largely froze its pension plans for U.S. salaried employees in 2007.
The company earned $7 million, or break-even per share, on revenue of $5 billion for the fourth quarter ending Dec. 31. That compares to net income of $18 million, or 7 cents per share, on income of nearly $5.7 billion a year ago.
For all of 2012, Goodyear had net income of $183 million, or 75 cents per share, on revenue of nearly $21 billion. Net income was down 43 percent from $321 million, or $1.32 a share, for 2011. Revenue was down 7.8 percent from $22.77 billion in 2011.
Goodyear sold fewer tires overall in 2012 than in 2011 but made more revenue per tire last year.
Shares of Goodyear fell 5 cents to $13.86. Shares are up 0.4 percent since Jan. 1 and are down 0.1 percent from a year ago.
Jim Mackinnon can be reached at 330-996-3544 or email@example.com.