By TIMOTHY AEPPEL
Staff Reporter of THE WALL STREET JOURNAL
Goodyear Tire & Rubber Co. reported a larger-than-expected
third-quarter loss, mainly due to high raw material and energy prices,
but vowed to build its market share in the wake of the Firestone recall.
The Akron, Ohio, company said it recorded a net loss of $6.6 million, or
four cents a share, compared with net income of $109.1 million, or 69
cents a diluted share, a year earlier. The latest quarter includes a charge
of $1.2 million related to closing a plant in Italy and a gain of $3.2 million
resulting from selling some property in Mexico. Analysts surveyed by
First Call/Thomson Financial had predicted Goodyear would report a loss
of two cents a share.
Sales increased nearly 6% to $3.48 billion from
$3.29 billion in the year-earlier third quarter.
"High raw material costs, especially those for
oil-derived products, remain a major factor in
our results," said Samir G. Gibara, Goodyear's
chairman and chief executive.
Speaking in a call to analysts, Mr. Gibara said
sales of tires to auto makers in their core North
American market slumped during the quarter in
the face of weaker car sales. But sales of
replacement tires surged 9.4% after rival
Bridgestone/Firestone Inc., a unit of Japan's
Bridgestone Corp., recalled 6.5 million tires in August.
Mr. Gibara said Goodyear has shipped more than 2.5 million tires of the
size and type needed to replace the Firestone tires that were subject to
the recall. He said he expects Goodyear to translate this sudden surge
in business into a permanent gain in market share in the months ahead,
including significant inroads in the replacement market as well as the
original equipment, or OE, market to car makers.
"Looking at next year, we expect a much stronger OE volume for
Goodyear as a result of the Firestone recall," said Mr. Gibara. "We have
received additional business from OE customers and we expect to
receive more as the fourth quarter unfolds, most of which will impact us
Wendy Needham, an analyst at Credit Suisse First Boston, said it
remains to be seen how beneficial such an increase in market share will
be to Goodyear or any other tire maker angling to take business once
held by Firestone. She said tire makers might be tempted to cut prices
as they battle to snare larger portions of what was formerly Firestone's
business. "The important question is what everyone does on prices,"
said Ms. Needham.
Write to Timothy Aeppel at email@example.com