Jim Mackinnon
Beacon Journal business writer

Goodyear Tire & Rubber Co. on Friday reported a loss in income despite record revenue in the first quarter of 2012.

The Akron tire maker said it lost $11 million, or 5 cents per share, on quarterly revenue of more than $5.5 billion. A year ago, Goodyear had a profit of $103 million, or 42 cents per share, on revenue of $5.4 billion.

Tire sales fell below forecasts. A big part of the quarterly loss was attributed to $86 million in charges, or 35 cents per share, for the early redemption of $650 million in senior notes due in 2016. As part of that refinancing, Goodyear issued $700 million in new debt due in 2022.

Goodyear also said that fewer global tire sales compared to a year ago reduced revenue by $345 million, while foreign currency translation reduced revenue by $108 million.

Because of the weaker-than-expected first-quarter tire sales, Goodyear said it expects to sell fewer tires this year than it previously forecast.

Even as they acknowledged the negatives of the first quarter, Goodyear’s top executives said they were pleased with the overall results and said the company remains committed to its strategies and is on target to meet long-term financial goals.

The company pointed to strong performance from its North American Tire segment, Goodyear’s largest division, where income doubled from a year ago. And while overall tire sales were down, the company reported it made 16 percent more revenue on each tire it sold in the quarter compared to the same period a year ago.

“Our results confirm that we’re continuing to make progress on the path to our target of $1.6 billion in segment operating income,” Richard Kramer, Goodyear’s chairman and chief executive officer, said in comments to industry analysts.

While not providing specific guidance, Goodyear should have stronger finances this year than in 2011, company executives said in a conference call. Goodyear in 2011 had a profit of $321 million on revenue of $22.8 billion, its first annual profit since 2007.

Shares of Goodyear fell 62 cents, or 5.1 percent, to $11.31 on Friday. Shares are down 20.2 percent since Jan. 1 and are down 30 percent from a year ago.

Analysts had expected Goodyear to show a profit of 3 cents per share for the quarter, not a loss of 5 cents per share, unadjusted for one-time items. Unadjusted revenue also fell below consensus forecast. When adjusted for one-time items, Goodyear showed a profit of 34 cents per share, well above analyst estimates of 7.4 cents per share.

North American Tire showed the most dramatic improvement in the quarter, Kramer said.

North American Tire segment income doubled to $80 million from $40 million a year ago. Tire sales dropped 7.9 percent to 15.8 million from 17.1 million in the first quarter of 2011. North American Tire revenue rose to nearly $2.5 billion, up 8.2 percent from $2.3 billion a year ago.

Starting in the current quarter, North American Tire is expected to benefit further from savings caused by the shutdown of the Union City, Tenn., tire factory, the company said. Goodyear said it expects to start seeing $80 million a year in savings starting this year from the plant closure.

Operating income fell 41.2 percent from $153 million a year ago to $90 million in Goodyear’s Europe, Middle East and Africa Tire segment; Latin America Tire segment operating income fell 17.9 percent from a year ago to $55 million; and Asia Pacific Tire segment operating income was flat at $67 million.

“In Europe, we felt the effects of softer consumer and commercial replacement [demand],” Kramer said.

Goodyear executives said they now see slower growth this year because of ongoing economic weakness in the company’s markets.

For all of 2012, Goodyear said it now expects North America consumer replacement tires sales to drop 1 to 3 percent from 2011, while original equipment sales will rise between 2 and 7 percent.

European consumer replacement sales are expected to be down 3 to 5 percent from 2011, with original equipment tire sales down 5 to 9 percent.

Raw material costs will be up about 9 percent in 2012 compared to 2011, the company said.

Darren Wells, Goodyear’s executive vice president and chief financial officer, said the company’s finances are sound and that Goodyear has $4.5 billion in cash and available credit.

In addition to refinancing $700 million in debt in the first quarter, Goodyear earlier this month refinanced an additional $3.2 billion in credit facilities. That means the company now has seven years before having to pay off debt maturities.

Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.