Goodyear swings to profit in 3Q

Goodyear swings to profit in 3Q

	Published : Tue, 30 Oct 2007 17:32 By : Agencies Print this Story

CLEVELAND (AP) - Goodyear Tire & Rubber Co., helped by the sale of its engineered products unit, swung to a big profit in the third quarter, even though North American tire sales were down 6 percent.

Shares climbed 7 percent in midday trading, as Goodyear reported strong international sales and profits.

Goodyear, the world's third-largest tire maker, said Tuesday that it earned $668 million, or $2.75 per share, for the quarter ended Sept. 30, compared to a loss of $48 million, or 27 cents a share, a year ago. Sales were $5.06 billion for the quarter, up from $4.9 billion in the year-ago period.

On Aug. 1, Goodyear completed its sale of nearly all of its engineered products business for $1.48 billion to EPD Inc., part of Washington-based private equity firm The Carlyle Group. Goodyear said it expects to use the money to reduce debt, cover obligations for employee benefits and buyouts, and invest in its core tire businesses.

Goodyear recorded an after-tax gain in the quarter of $517 million, $2.12 per share, on the engineered products sale.

Discounting the gain and one-time charges, Goodyear earned 70 cents per share.

Analysts surveyed by Thomson Financial survey expected earnings of 53 cents a share for quarter.

Goodyear recorded a restructuring charge of $107 million, or 60 cents a share, in the year ago quarter that included closing a plant in Tyler, Texas.

Through nine months of 2007, Goodyear made $550 million, or $2.44 per share, on sales of $14.9 billion, compared with year-ago earnings $28 million, or 16 cents per share, on sales of $14.1 billion.

Taking out the engineered products unit, year-to-date results show a loss of 36 cents per share from continuing operations.

Goodyear's North American tire sales in the third quarter were down 6 percent from a year ago, primarily because the company left some private label tire markets along with weak sales in original equipment and replacement markets. But Goodyear also gained market share with its more profitable Goodyear brand tires.

Operating income of $66 million for that key segment was the highest since the third quarter of 2001 and up substantially from $19 million in the same 2006 quarter.

'Despite market challenges, our results are among the best ever achieved by Goodyear,' said Robert J. Keegan, chairman and chief executive.

Keegan told analysts on a conference call that demand for some of Goodyear's premium products has been so strong that there have been supply constraints.

Keegan said Goodyear is accelerating planned investments to boost capacity for making high value-added tires while making the most of international growth.

'We had significant growth in our operations outside the U.S., where we enjoyed higher margins,' Keegan said.

The four segments other than North America -- Asia Pacific Tire; Latin American Tire; European Union Tire; and Eastern Europe, Middle East and Africa Tire -- each achieved record sales.

Goodyear shares rose $1.91 to $29.02 in midday trading. The shares have traded from $14.62 to $36.90 the past year.

Goodyear, based in Akron, has about 70,000 employees and makes tires and chemicals in 26 countries.