(By Balaseshan) Goodyear Tire & Rubber Co. (NYSE:GT) reported an increase in quarterly earnings on lower costs and expenses. However, revenue fell 8% due to weaker economic conditions and unfavorable foreign currency translation.
Earnings for the second quarter were $85 million or $0.33 per share, up from $40 million or $0.16 per share last year.
The latest quarter results included total charges of $0.09 due to rationalizations, asset write-offs and accelerated depreciation, and debt financing fees of $0.09 related to the refinancing of $3.2 billion in credit facilities.
The results also include $0.07 due to charges relating to labor claims with respect to a previously closed facility in Europe, $0.01 due to discrete tax charges, and $0.01 in costs related to tornado damage in 2011 at a manufacturing facility; and a gain of $0.03 on asset sales.
Sales fell 8% to $5.2 billion.
Analysts, on average, polled by Thomson Reuters had expected earnings of $0.45 per share on revenue of $5.74 billion for the second quarter.
North American Tire sales increased 2% to $2.5 billion, while Europe, Middle East and Africa Tire sales dropped 18% to $1.6 billion. Latin American Tire sales plunged 21% to $503 million, while Asia Pacific Tire sales decreased 4% to $600 million.
Tire unit volumes fell 9% to 39.2 million, primarily reflecting weaker replacement industry volumes, most notably in Europe.
Segment operating income declined by $46 million to $336 million, reflecting lower tire volume and associated unabsorbed overhead, as well as unfavorable foreign currency translation. Improved price/mix of $313 million more than offset $238 million in higher raw material costs ($171 million net of raw material cost reduction actions).
Looking ahead into the third quarter, Goodyear anticipates its raw material costs to be essentially flat with the prior year.
For the fiscal 2012, Goodyear now expects that its tire unit volume to be about 5% to 7% below 2011. Goodyear expects its raw material costs will increase about 7% compared with 2011.
GT closed Monday's regular session down 1.89% at $10.37. The stock has been trading between $8.53 and $16.47 for the past 52 weeks.