Goodyear Tire & Rubber Co. posted higher overall profit but lower sales for its third quarter compared to a year ago, with its North American Tire division showing record profit for the quarter.
Goodyear reported Tuesday that net income was $166 million, or 62 cents per share, on revenue of $5 billion. Net income was up 51 percent from $110 million, or 41 cents per share, a year ago while sales were down 5 percent from nearly $5.3 billion in the third quarter of 2012.
Goodyear shares sold off Tuesday in large part because revenue results fell more than $200 million short of analyst expectations.
Shares fell $1.29, or 5.9 percent, to $20.76. Shares are up 50.3 percent since Jan. 1 and are up 88.4 percent from a year ago.
“We’re very pleased with the results for the quarter and we’re looking forward to finishing the year strong,” Rich Kramer, chairman and chief executive officer, said in a call with industry analysts.
Looking long-term, Kramer said Goodyear remains on track.
“These results indicate that we have improved our capability to be profitable throughout the economic cycle,” Kramer said.
The company said it benefited from lower raw material costs in the quarter.
Goodyear said it experienced weak but stabilizing conditions in its global developed markets.
For the first nine months of the year, Goodyear said it had net income of $372 million, or $1.43 a share, on revenue of $14.8 billion. Net income is up from $183 million, or 73 cents per share, for the same period a year ago. Revenue was down 8 percent from the first nine months of 2012.
Tire unit volumes for the first nine months of the year totaled 121.6 million, down 2 percent from the same period a year ago.
Goodyear executives said their industry outlook for the remainder of fiscal 2013 remains unchanged in North America. The company said it expects to have more than $1.5 billion in segment operating income for the year.
North American Tire, which accounts for nearly half of Goodyear revenue, reported nearly $2.2 billion in sales, down from $2.4 billion a year ago. Segment operating income rose to $161 million from $130 million a year ago. The division set a record for third-quarter profit, the company said.
In addition, North American Tire recorded its first increase in numbers of tires sold in 10 quarters, with 15.8 million tires sold compared to 15.6 million a year ago. Original equipment tire sales accounted for the increase, with replacement sales flat, the company reported.
When fiscal 2013 ends, Goodyear said it expects North America Tire consumer replacement sales to be flat, consumer original equipment to be up about 5 percent, and commercial replacement and original equipment to be flat compared to a year ago.
Earnings improved in all four divisions compared to a year ago, Goodyear said.
Goodyear on Dec. 1 is scheduled to pay its first quarterly dividend — 5 cents per share — in more than 10 years.
Kramer called the reinstated dividend “a real symbol of the improvements we’ve made and the confidence we have in our results going forward.”
While the reinstated dividend has received a lot of attention, Goodyear management is focused on improving the company’s balance sheet and keeping the company competitive, Kramer said.
Jim Mackinnon can be reached at 330-996-3544 or firstname.lastname@example.org.