The Goodyear Tire & Rubber Company
) reported a 5.3% rise in earnings per share to 80 cents in the
second quarter of 2014 from 76 cents a year ago (all excluding
special items). Earnings were at par with the Zacks Consensus
Estimate. Net income escalated 7.7% to $225 million from $209
million in the second quarter of 2013.
Including special items, the company reported net income of $213
million or 76 cents per share in the quarter, compared with net
profit of $181 million or 67 cents per share a year ago.
Revenues in the quarter fell 4.9% year over year to $4.66 billion,
missing the Zacks Consensus Estimate of $4.74 billion. The drop in
revenues can be attributed to decline in original equipment unit
volume by 4%, primarily in Latin America.
Tire unit volumes increased 3% to 40.6 million in the second
quarter of 2014. Replacement tire shipments went up 6% on the back
of better performance cross all four regions.
Segment operating income improved 7.5% to $460 million in the
second quarter of 2014 from $428 million a year ago. The
year-over-year increase was driven by significant improvement in
Europe, Middle East and Africa, partially offset by softness in
Revenues at the
North America segment
dipped 7.1% year over year to $2.04 billion. The deterioration was
led by lower third party chemical sales and price/mix. Unit sales
augmented 3.4% to 15.3 million units. Original equipment unit
volume fell 4% while replacement tire shipments rose 6% year over
Revenues from the
Europe, Middle East and Africa segment
increased 0.2% to $1.58 billion. Revenues benefited from increased
tire unit sales and favorable foreign currency translation, which
was partially hurt by lower price/mix. Unit sales increased 3.4% to
15.1 million units. Original equipment unit volume was flat while
replacement tire shipments went up 4% year over year.
Sales in the
Latin America segment
fell 7.9% to $489 million due to unfavorable foreign currency
translation and a fall in tire unit volumes, partially offset by
improved price/mix. Unit sales decreased 2.2% to 4.4 million units.
Original equipment unit volume was down 33% owing to a weak
performance in Brazil while replacement tire shipments improved 13%
year over year.
Revenues from the
fell 7.2% to $543 million due to lower price/mix and unfavorable
foreign currency translation. The upside was partly offset by an
increase in tire volume to 5.8 million units. Original equipment
unit volume was up 6% and replacement tire shipments went up 4%
year over year.
Goodyear had cash and cash equivalents of $1.6 billion as of Jun
30, 2014, down from $3.0 billion as of Dec 31, 2013. Long-term debt
and capital leases amounted to $6.8 billion as of Jun 30, 2014,
against $6.2 billion as of Dec 31, 2013.
Cash used in operations in the first half of 2014 increased to $1.1
billion from $462 million in the year-ago quarter. Meanwhile,
capital expenditure stood at $441 million compared with $493
million in the same period a year ago.
Goodyear paid a quarterly dividend of 5 cents per share on Jun 2,
2014. The company also declared a quarterly dividend of 6 cents per
share payable on Sep 2, 2014 to shareholders of record as on Aug 1,
Goodyear repurchased 1.15 million shares at an average price of
$26.56 during the quarter under its previously announced $450
million share repurchase program.
For the period 2014-2016, Goodyear expects annual segment operating
income to increase 10-15%. The company also targets achieving
positive free cash flow over this period. Moreover, Goodyear
expects a 2-3% increase in unit volumes in 2014.
Goodyear Tire is one of the largest tire manufacturing companies
in the world. The company currently retains a Zacks Rank #4 (Sell).
Some better-ranked stocks that are worth considering in the auto
sector include Visteon Corporation (
), Magna International Inc. (
) and Cooper Tire & Rubber Co. (
). All the stocks sport a Zacks Rank #1 (Strong Buy).
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GOODYEAR TIRE (GT): Free Stock Analysis Report
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