Goodyear Tire & Rubber Co.
) has intensified its focus on Off-The-Road (OTR) tire business by
fully acquiring its Nippon Giant Tire (NGT) unit in Japan for an
undisclosed amount. The company was a majority shareholder of NGT
since 1985 and has bought the 100% ownership in NGT from joint
venture partners Toyo Tire & Rubber Co Ltd and Mitsubishi
Goodyear also announced that it will invest $250 million in NGT
for upgrading and expanding its facility in order to meet global
demand of OTR tires. The expansion will also help the company's OTR
business in Asia Pacific, mainly Australia, which is one of the
world's largest markets for OTR tires.
The expanded facility is anticipated to be fully operational by
early 2014. It will boost employment at the operation to nearly 400
Goodyear, a Zacks #3 Rank (Hold) company, reported a 34% decline
in profits to $84 million or 34 cents per share in the first
quarter of 2012 from $127 million or 51 cents in the same quarter
of 2011 (all excluding special items). However, profits were
significantly higher than the Zacks Consensus Estimate of 8 cents
per share during the quarter.
Revenues in the quarter increased marginally by 2% to $5.5
billion from $5.4 million in the first quarter of prior year. The
company's sales were negatively affected by an 8% fall in tire
volumes to 43 million units. Consequently, revenues were lower than
Zacks Consensus Estimate of $5.9 billion.
Goodyear expects full-year tire unit volume to grow moderately
in 2012 due to weak demand in different economies. The company
expects tire volume for the full year 2012 to decline 2% from
Goodyear anticipates raw material costs to increase 12% for the
second quarter of 2012 and to be in line in the second half of 2012
compared with 2011. For the full year, raw material cost is
expected to hike 9% from 2011.
Goodyear is one of the largest tire manufacturing companies
worldwide. The company produces tires for automobiles, commercial
trucks, light trucks, SUVs, race cars, airplanes, farm equipment
and for heavy earth-mover machinery. It sells its products under
the Goodyear, Kelly, Dunlop, Fulda, Debica, Sava and various other
"house" brands as well as private-label brands.
The company has two major competitors: Bridgestone of Japan and
Michelin of France. These two companies command about 55% of the
global market. Other significant competitors include
Cooper Tire & Rubber Co.
COOPER TIRE (CTB): Free Stock Analysis Report
GOODYEAR TIRE (GT): Free Stock Analysis Report
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