Goodyear Reports Fourth Quarter, Full Year Results for 2010

Asia Pacific Tire's fourth quarter sales increased 16 percent from last year to $562 million, which were the highest ever achieved in any quarter.  Sales reflect a 5 percent increase in tire unit volume.  Original equipment unit volume increased 12 percent.  Replacement tire shipments were up 1 percent.  Fourth quarter revenue per tire, excluding the impact of foreign currency translation, increased 6 percent in 2010 compared to 2009.  Favorable foreign currency translation increased sales by $32 million.

Fourth quarter segment operating income of $60 million was $10 million lower than last year. The 2010 quarter was positively impacted by improved price/mix of $38 million and higher volume. Raw material costs increased $45 million over last year.  Favorable foreign currency translation increased segment operating income by $5 million.  Costs related to the planned start up of a new factory in China negatively impacted segment operating income by $5 million.

Tennessee Plant Closure

Goodyear today announced plans to close its Union City, Tenn., tire manufacturing facility by the end of 2011 as part of its strategy to reduce high-cost manufacturing capacity globally and provide cost effective high-value-added products that the market is demanding while continuing to make high quality products for its customers.

"While we are committed to manufacturing in North America, all of our plants must be cost competitive and be able to demonstrate sustainable world-class productivity.  That is not the case with this plant, and as a result, the market has moved beyond what the factory is able to build," said Kramer.

This closure, when complete, will eliminate approximately 12 million units of available capacity and is the final action in plans announced in 2009 to eliminate 15 million to 25 million units of high-cost capacity globally.  This action is expected to provide annual cost savings of approximately $80 million.  The Union City plant currently employs approximately 1,900 associates.  

Goodyear's fourth quarter 2010 after-tax restructuring charge related to this action was approximately $160 million.  Total after-tax restructuring, accelerated depreciation and asset write-off charges for this action are estimated to be approximately $270 million, of which approximately $140 million will be cash charges.  

2011 Outlook

Goodyear expects the global tire industry to continue to grow in 2011, with volume expansion across all regions and major segments.  

In North America, the consumer replacement industry is expected to grow between 1 percent and 3 percent, consumer original equipment between 5 percent and 10 percent, commercial replacement between 3 percent and 8 percent and commercial original equipment between 20 percent and 30 percent.

In Europe, the consumer replacement industry is expected to grow between 1 percent and 3 percent, consumer original equipment 0 percent to 5 percent, commercial replacement between 5 percent and 10 percent and commercial original equipment between 30 percent and 40 percent.

Goodyear anticipates its raw material costs in the first quarter of 2011 will increase 25 percent to 30 percent compared with the prior-year quarter.  

"We carry significant momentum into 2011 and expect industry growth in our targeted segments will drive a 3 percent to 5 percent increase in Goodyear's unit volume," said Kramer.  "Additionally, we will maintain our focus on price/mix and expect continued benefits related to cost performance and unabsorbed fixed cost recovery."

Goodyear is one of the world's largest tire companies.  It employs approximately 72,000 people and manufactures its products in 56 facilities in 22 countries around the world.  Its two Innovation Centers in Akron, Ohio and Colmar-Berg, Luxembourg strive to develop state-of-the-art products and services that set the technology and performance standard for the industry.  For more information about Goodyear and its products, go to www.goodyear.com.