Goodyear Drops as Profit Forecast Pared on Europe
Stock Chart for Goodyear Tire & Rubber Co/The (GT)
Goodyear Tire & Rubber Co. fell less than a percent after the largest U.S. tiremaker said operating income this year would be lower than it originally forecast as it tries to repair its European operations.
Goodyear slipped 0.4 percent to $13.86 at the close in New York after plunging as much as 5.8 percent. The shares have risen 0.4 percent this year. Goodyear slid 2.5 percent in 2012, compared with a 13 percent gain for the Standard & Poor’s 500 Index.
Goodyear said in a statement it will earn $1.4 billion to $1.5 billion in operating income this year, compared with an earlier forecast of $1.6 billion as demand for tires slowed with auto production in Europe, which is in its worst auto-sales slump in 19 years. Automakers including General Motors Co. and Ford Motor Co. have announced plans to close European plants.
The company said fourth-quarter sales fell 11 percent to $5.05 billion. The average of four analysts’ estimates was $5.34 billion. Tires sold in Goodyear’s North America region fell 10 percent to $2.31 billion. In the Europe, Middle East and Africa unit, sales decreased 16 percent to $1.6 billion, Goodyear said. The two regions comprised almost 80 percent of Goodyear’s revenue in 2011.
Last month, Goodyear said it was closing its farm-tire plant in France, cutting 39 percent of its jobs in the country, amid labor disputes and lower demand. The closing and exiting of the farm-tire business in the region, will improve operating profit in the region by $75 million, Goodyear said in a U.S. regulatory filing Jan. 31.
Goodyear reported net income fell to $7 million, or break- even per share, compared with $18 million, or 7 cents, a year earlier, the Akron, Ohio-based company said in its statement. The per-share figure reflects dividends paid on preferred shares.
Excluding expenses to close the French factory and other one-time costs and gains, profit was 39 cents a share. The average estimate of eight analysts surveyed by Bloomberg was for a profit of 20 cents.
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