Goodyear’s first quarter losses better than anticipated

CLEVELAND – Goodyear Tire ‘amp; Rubber Co., the largest U.S. tire maker, yesterday said it lost $333 million in the first quarter, reflecting a sales drop of 28 percent and rising raw materials costs. But its loss adjusted for one-time items was smaller than analysts expected, and its shares rose $1.34, or 12.8 percent, to $11.81 in afternoon trading. Robert Keegan, chairman and chief executive, said the company’s results ‘generally reflect the difficult market conditions.’ He said the company is aiming to control costs and preserve cash so Goodyear will be in position to benefit as its markets recover. The Akron, Ohio-based tiremaker reported its loss amounted to $1.38 per share in the three months ended March 31 in contrast to a profit of $147 million, or 60 cents per share, a year ago. Sales fell to $3.54 billion from $4.94 billion a year ago. Excluding one-time items, Goodyear said it lost $1.19 per share in the latest quarter. Analysts surveyed by Thomson Reuters had expected, on average, a loss of $1.38 per share on sales of $4.02 billion. The company said it sold 20 percent fewer tires in the quarter due to significantly lower global industry demand. It said unfavorable currency translation reduced sales by $484 million. Raw material costs, meanwhile, increased 31 percent, or about $332 million, the company said. The company had announced in February that it expects to cut 5,000 jobs this year, and Goodyear said yesterday it cut about 3,800 positions in the first three months of the year. It was the second consecutive big quarterly loss for Goodyear. It lost $330 million in the last three months of 2008. Keegan, in a conference call with analysts, said weakness exists throughout the tire industry. ‘We expect this industry weakness will continue to pressure our results during the second quarter,’ he said. He said Goodyear’s original equipment to Detroit’s Big Three automakers now is less than 7 percent of Goodyear’s global sales. But sales to consumers are under pressure, too. ‘Consistent with what we saw during 2008, we continue to see a growing number of consumers defer tire purchases,’ he said. The company is trying to increase consumer interest by introducing new products, including a tire aimed at adding to fuel efficiency. He said the company has offered 23 new products in the first quarter. Darren Wells, Goodyear executive vice president and chief operating officer, said the comopany plans to cut production by about 11 million units in the second quarter.