NEW YORK (Commodity Online): Even as the Goodyear Tire & Rubber Company (NYSE: GT) posted improved third quarter earnings, the company stocks tanked by over 20% on the New York Stock Exchange today.

GT traded with heavy losses on the US bourses at USD 13.34 down by over 20% from its previous close. Meanwhile, the benchmark index, Dow was trading down by over 0.5% at 9814 points.

Get Commodity Trading Tips at lowest rates

Company’s sales improved by 11% to USD 4.4 billion dollars against the previous quarter. However, they were down by 15% from the corresponding period in 2008.

Third quarter 2009 sales reflect the USD 276 million impact of a 7% decline in tire unit volume due to lower industry demand as well as a USD 279 million reduction in sales in other tire-related businesses, primarily third-party chemical sales by North American Tire. Unfavorable foreign currency translation further reduced sales by USD 159 million.

Goodyear successfully launched 15 new products in the quarter, in addition to the 42 launched in the first half. The company has exceeded its goal of more than 50 new product launches during 2009.

The company had segment operating income of USD 275 million in the third quarter of 2009, up from USD 266 million in the 2008 third quarter and USD 24 million in 2009’s second quarter.

Compared to the prior year, third quarter 2009 segment operating income reflects continued weak industry demand, which resulted in a negative volume impact of USD 64 million and under-absorbed fixed costs of approximately USD 107 million. The 2009 quarter benefited from USD 207 million in lower raw material costs.

During the third quarter of 2009, the company reduced its global work force by 300 positions, adding to approximately 5,500 first half reductions. The company’s full-year target was a reduction of 5,000 positions.

Third quarter 2009 Goodyear net income was USD 72 million (30 cents per share), up from USD 31 million (13 cents per share) in 2008’s third quarter. The company had net losses of USD 221 million (92 cents per share) in the second quarter of 2009 and USD 333 million ($1.38 per share) in the 2009 first quarter. All per share amounts are diluted.

Positive cash flow and reduced working capital requirements have combined to improve Goodyear’s cash and liquidity position. As part of its supply chain initiative, inventory levels are more than USD 1 billion below the year-end 2008 level.

“The strength of our brands and steady stream of new and innovative tires such as our branded fuel-efficient tires provided marketplace momentum and led a strong third quarter performance,” said Robert J. Keegan, chairman and chief executive officer of the company.

“The success of our Top Line, Cost and Cash actions together with improving market conditions and lower raw material costs drove improved third quarter earnings compared to both last year and to the second quarter,” he said. “We are pleased that our results for the quarter were in line with our original operating plan despite more difficult conditions than we had expected at the beginning of the year,” Keegan added.

Goodyear said it anticipates year-over-year global industry growth in 2010, especially in markets for tires featuring high-value-added features, larger rim diameters and fuel-efficient technology. The company’s industry-leading new product engine, advantaged supply chain and reduced cost structure position it well to capitalize on these market opportunities.

Post your comment  (0)

Connect:

Post to Twitter

Post to Facebook