Goodyear reported higher profits and lower revenue Thursday for its fourth quarter and the full year of 2013.
The company also said it used more than $1.1 billion in cash to fully fund its hourly worker pension plan in North America and announced it is ending its once-landmark alliance with a Japanese tire maker.
Shares of the Akron tire maker rose sharply in early trading Thursday as the company’s profits beat analyst estimates even as revenue figures fell short. Goodyear Tire & Rubber Co.’s critical North American Tire division had record earnings for the year.
Annual net income was $417 million higher than a year ago even as revenue was down from 2012, the Akron tire maker reported.
“Our outstanding fourth quarter and full-year earnings confirm that our strategy is working and demonstrate Goodyear’s ability to deliver sustainable earnings growth and strong free cash flow,” said Richard Kramer, chairman and chief executive officer, in a statement.
Goodyear said it used $1.15 billion in cash in early January to fully fund its hourly worker pension plan.
Fully funding and freezing the pension plan for the North American unionized workforce will free up cash and improve earnings, the company said. Goodyear and the United Steelworkers agreed to the pension funding plan in contract talks last year. The company fully funded its salaried pension plan last year.
Goodyear also announced it is seeking to end its once-ballyhooed relationship with Japanese tire maker Sumitomo Rubber Industries. The two companies are in joint ventures with Goodyear Dunlop in North America and in Europe; Goodyear is the majority owner in both ventures. Dunlop is the high performance and luxury sport tire brand that Goodyear acquired from Sumitomo in 1999.
Goodyear executives said they believe Sumitomo violated antitrust agreements and in January began proceedings to dissolve their alliance. There should be no material effect on customers or finances, Chief Financial Officer Laura Thompson said in a conference call.
The partnership was announced with great fanfare in 1999; it was called the biggest deal in Goodyear history back then and briefly pushed Goodyear back to being the top tire sales company with about 22 percent of the global market. But the partnership soon went sour as Goodyear began hemorrhaging money in the early 2000s.
Goodyear has sold off most of its ownership in Sumitomo over the years.
Goodyear said it has more details regarding its actions involving Sumitomo in its latest annual 10-K document filed Thursday with the Securities and Exchange Commission.
On another issue, Goodyear said it has stopped making tires at its Amiens, France, factory, where it has had serious labor issues, and will close it by March.
Goodyear reaffirmed its earnings and revenue outlook for 2014.
The company reported net income of $228 million, or 84 cents per share, on revenue of nearly $4.8 billion for the fourth quarter. A year ago Goodyear reported zero net income on revenue of $5.05 billion.
For the full year, Goodyear had net income of $600 million, or $2.28 a share, on revenue of more than $19.5 billion. That compares to net income of $183 million, or 74 cents per share, on revenue of nearly $21 billion for 2012. The company sold 162.3 million tires, down 1 percent from 2012.
North American Tire sold 16.3 million tires in the fourth quarter, up from 15.8 million a year ago. Revenue was $2.1 billion, down from $2.3 billion; segment operating income was $199 million, up from $116 million for the fourth quarter of 2012.
For the full year, North American Tire sold 61.7 million tires, down from 62.6 million in 2012. Sales totaled nearly $8.7 billion, down from $9.7 billion in 2012. Operating income was $691 million, up from $514 million the previous year.
Shares were up $2.39, or about 10 percent, to $26.57, as of 12:18 p.m.
Jim Mackinnon can be reached at 330-996-3544 or email@example.com