The Goodyear Tire & Rubber Company
) reported a 89.7% rise in earnings per share to 74 cents in the
fourth quarter of 2013 from 39 cents a year ago (all
excluding special items). The reported earnings beat the Zacks
Consensus Estimate of 63 cents. Net income escalated to $202
million from $97 million in the fourth quarter of 2012.
Including special items, the company reported a profit of $228
million or 84 cents per share in the quarter, up from a breakeven
a year ago.
Revenues in the quarter fell 5% year over year to $4.8 billion,
missing the Zacks Consensus Estimate of $5.02 billion. The drop
in revenues can be attributed to a $178 million impact of lower
sales in other tire related businesses, specifically due to a
decline in third-party chemical sales in North America.
In addition, revenues include the negative impact of $36
million from lower price/mix due to lower raw material costs and
$102 million in unfavorable foreign currency translation. These
were partially offset by a $64 million increase in tire unit
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Operating income improved 54% to $419 million in the fourth
quarter of 2013. The improvement was driven by favorable
price/mix and lower unabsorbed overhead due to higher production
and increased tire unit volumes. These were partially offset by
adverse impacts of foreign currency translation and higher SAG
Fiscal 2013 Performance
Goodyear Tire's earnings increased significantly to $2.28 per
share for full-year 2013 from 74 cents in 2012, missing the Zacks
Consensus Estimate of $2.51. Revenues for full-year 2013
decreased 7% to $19.5 billion from $21 billion in 2012, missing
the Zacks Consensus Estimate of $19.8 billion.
Revenues from the North American segment dipped 8% year over year
to $2.1 billion. The decline in revenues includes a negative
impact of $170 million from lower sales in other tire related
businesses, specifically a drop in third-party chemical sales and
lower price/mix. These were partially offset by a 3% hike in tire
unit volumes, 7% in original equipment unit volume and 1% in
replacement tire shipments.
Revenues from the Europe, Middle East and Africa segment
increased 2% to $1.63 billion. Revenues benefited from increased
tire unit sales and favorable foreign currency translation, which
was partially offset by lower price/mix.
Sales in Latin America fell 9.1% to $492 million due to
unfavorable foreign currency translation and a fall in tire unit
volumes. Revenues benefited from improved price/mix.
Revenues at the Asia-Pacific segment fell 8.7% to $537 million
due to lower price/mix, reduced sales in other tire-related
businesses and unfavorable foreign currency translation.
Goodyear had cash and cash equivalents of $3 billion as of Dec
31, 2013, up from $2.3 billion as of Dec 31, 2012. Long-term debt
and capital leases amounted to $6.2 billion as of Dec 31, 2013,
against $5.0 billion as of Dec 31, 2012.
Cash flow from operations in 2013 dropped to $938 million from
$1.04 billion in 2012. Capital expenditure stood at $1.2 billion
compared with $1.1 billion in the same period a year ago.
For the period 2014 -2016, Goodyear expects annual segment
operating income to increase 10-15%. Moreover, the company
expects a 2-3% increase in unit volumes in 2014 from 2013.
Goodyear Tire & Rubber Company is one of the largest tire
manufacturing companies worldwide. The company currently retains
a Zacks Rank #3 (Hold).
Other stocks that are performing well include
STRATTEC Security Corp.
Allison Transmission Holdings, Inc.
). All the companies carry a Zacks Rank #1 (Strong Buy).