Goodyear’s Profit Falls, Tiremaker Increases Cost-Cutting Goal - Tire Review Magazine

Goodyear’s Profit Falls, Tiremaker Increases Cost-Cutting Goal

(Akron/Tire Review) Despite what it called “record” sales of $5.1 billion in the second quarter, Goodyear Tire & Rubber Co.’s first half of 2006 saw net profits fall from $137 million last year to $76 million this year.

For the second quarter, Goodyear posted total net profits of $2 million.

The results apparently have spurred the tiremaker to look for additional ways to cut operational costs. In releasing the results, Goodyear Chairman and CEO Robert Keegan said the company was increasing its cost-reduction goal. Previously, the company said it wanted to cut costs by $750 million to $1 billion by 2008. Now, Keegan has “raised the bar to more than $1 billion and will continue to intensify our initiatives to reduce our costs."

The profit fall off was blamed on the weak North American tire market, high raw material costs, operating cost restructuring and costs associated with plant closures. Goodyear said that its first-half 2006 raw material costs increased approximately $389 million, or 15%, compared to the year-ago period.

Global tire unit sales reached 108 million tires for the first half, down 4% from last year’s 112.3 million units. North American unit sales alone fell from 50.6 million tires through the first half of last year to 46.9 million tires this year.

In terms of dollar sales, though, Goodyear’s North American unit was up slightly year-to-year, from $2.296 billion in 2005 to $2.34 billion in the first half of 2006.

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