The Goodyear Tire reported an 89.7% rise in earnings per share to
$0.74 in the fourth quarter of 2013 beating the Zacks Consensus
Estimate of $0.63. However, 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 lower
sales in other tire related businesses, specifically due to a
decline in third-party chemical sales in North America, lower
price/mix and unfavorable foreign currency translation. 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. As a result, we maintain our Neutral
recommendation on the stock.
The Goodyear Tire & Rubber Company (GT) is one of the
world's largest tire manufacturing companies, selling under
Goodyear, Kelly, Dunlop, Fulda, Debica, Sava and various other
"house" brands (such as Lee, Kingstone, Douglas, Mohave and
Republic) as well as private-label brands (including Roadhandler,
Star, and Monarch). Goodyear sells tires, undertakes automotive
repairs and provides other services through 1,300 tire and auto
service centers. It runs manufacturing operations at 52 facilities
(including 15 in the U.S.) which are spread across 22
On an international level, there are two major competitors for
Goodyear Bridgestone, Japan, and Michelin, France. Together, the
three companies command more than half of the global market. Other
significant competitors include Cooper Tire & Rubber, U.S.
Continental Tires, Germany Pirelli, Italy Toyo Tires, Japan
Yokohama Tire, Japan Kumho Tires, South Korea Hankook Tire, South
Korea and other various regional tire manufacturers.
Although Goodyear generates worldwide sales, North America is
its leading market, accounting for about half of the total revenue.
Roughly 70% of the tire units are targeted at the replacement
market and 30% for original equipment manufacturers (OEMs). Around
80% of tires are high-performance as opposed to low-end
private-label brand tires. Furthermore, nearly 90% of the business
The tire business is organized into four geographical segments:
North America (44.4% of the total revenue in the first nine months
of 2013), Europe, Middle East and Africa (EMEA) (33.5%), Latin
America (10.7%) and Asia-Pacific (11.4%).
In the North America segment, the company owns and operates 7
tire-manufacturing facilities in the U.S. and 2 in Canada. The EMEA
segment operates 16 manufacturing facilities in England, France,
Germany, Luxembourg, Poland, Slovenia, South Africa and Turkey. In
the Latin America segment, the company has 6 tire manufacturing
facilities in Brazil, Chile, Colombia, Peru and Venezuela. In
Asia-Pacific, the company owns and operates 8 tire plants in China,
India, Indonesia, Japan, Malaysia and Thailand.
The Goodyear Tire & Rubber Co. (GT): Read the
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