Shares of Goodyear sold off Tuesday as the Akron tire maker lost money in its first quarter in large part because of a $132 million currency charge from its Venezuela operations. Revenue was also down from a year ago.
Goodyear Tire & Rubber Co. reaffirmed its earnings outlook for the full year and said it expected tire sales to grow 2 to 3 percent from 2013 levels.
“Despite the Venezuelan charge in the quarter, our operating results remained strong and in line with our expectations and we are reaffirming our 2014-2016 financial targets,” Richard J. Kramer, chairman and chief executive officer, said in a statement. “We delivered solid performance in our developed markets, led by North America, which reported a 23 percent increase in earnings. Growth in North America and Europe offset headwinds in emerging markets where we continue to navigate foreign currency and economic challenges.”
Goodyear lost $58 million, or 23 cents per share, on revenue of $4.47 billion. A year ago, the company had a profit of $26 million, or 10 cents per share, on revenue of $4.85 billion.
Earnings and revenue fell below analyst expectations. Goodyear on April 10 warned in a regulatory filing that it expected its Venezuela operations would hurt first-quarter results.
Adjusted for one-time factors, Goodyear had net income of $156 million, or 56 cents per share, compared to $118 million, or 42 cents per share, a year ago.
Shares fell $2.05, or 7.7 percent, to $25.11. Shares are up 5.7 percent including dividends since Jan. 1 and are up 101.1 percent from a year ago.
Goodyear said it had record segment operating income of $373 million for the first quarter, up 24 percent from a year ago.
Its North American Tire unit had first-quarter record operating income of $156 million on revenue of nearly $1.9 billion. Income was up 22.8 percent from $127 million while revenue was down 13.3 percent from $2.17 billion a year ago. Tire sales totaled 14.6 million, down 1.4 percent from 14.8 million for the first quarter of 2013.
Besides issues in Venezuela, lower chemical sales in North America also hurt first-quarter revenue, said Laura Thompson, chief financial officer.
Overall, Goodyear sold 40 million tires in the first quarter, up 1 percent from a year ago. Original equipment tire sales were down 2 percent from the first quarter a year ago while replacement tire sales grew 3 percent.
“We remain confident in our full-year expectation of 2 percent to 3 percent year-over-year volume growth, despite the negative impact of severe January winter weather in North America and labor and economic disruptions in Venezuela during the quarter,” Kramer said.
January winter weather reduced tire volume shipments by 9 percent as vehicle makers cut production and consumer sales were flat.
“The situation improved throughout the quarter with March volumes increasing 5 percent,” Kramer told industry analysts in a conference call.
The company’s Europe, Middle East and Africa Tire division had $110 million in segment income on $1.67 billion in sales, up from $31 million in income and $1.6 billion in sales a year ago.
Latin America Tire reported $42 million in income on $422 million in sales, down from $60 million in income on $513 million in revenue a year ago. Goodyear said issues included labor disruptions in Venezuela.
“The combination of volatile economic conditions and disruption due to the labor negotiations had a negative impact of about one percentage point on our total company first-quarter volumes,” Kramer said. “We expect our volumes to increase in the second quarter, given the conclusion of our labor negotiations.”
Asia Pacific Tire reported income of $65 million on revenue of $492 million, down from $84 million in income and $567 million in revenue a year ago.
Goodyear also said in a regulatory filing that it expects raw material costs to be lower this year than in 2013.
Jim Mackinnon can be reached at 330-996-3544 or email@example.com.