Shares in Goodyear fell on Tuesday after the US tyre manufacturer missed Wall Street’s estimates and warned of slowing growth, despite reporting its first annual profit in three years, boosted by higher prices.
Goodyear swung to an $18m, or 7 cents a share, net profit in the fourth quarter from a loss of $177m, or 73 cents a share, in the final three months of 2010. The average estimate of analysts surveyed by Bloomberg was a net profit of 21 cents a share.
Revenue was up 12 per cent in the quarter to $5.68bn from $5.07bn a year ago despite a 5 per cent drop in the number of tyres sold, but that missed the $5.86bn Wall Street had expected.
Goodyear said the decline in volume was in part due to lower demand for replacement tyres in its mature markets, challenges in Latin America and flooding in Thailand, which alone cost the company $16m. But higher pricing offset those declines, with revenue per tyre climbing 19 per cent. Revenue growth was led by the North American business, up a record 17 per cent.
“Despite lower fourth-quarter unit volume, all four of our tyre businesses achieved record fourth-quarter and full-year sales,” said Richard Kramer, Goodyear’s chief executive, in a statement. “We feel good about the progress we have made in improving our business model and remain confident in our long-term strategy.”
However, the company pared its outlook for the future, saying that while it expects long-term growth to continue, that expansion will be slower than previously expected due to economic weakness, particularly in Europe. Goodyear forecast that sales volumes would be flat in 2012 from last year and that raw material costs would rise about 5 per cent this year.
For the full year, Goodyear’s net profit reached $321m, or $1.26 a share, compared with 2010’s loss of $216m, or 89 cents a share. Full-year revenue rose 21 per cent to $22.77bn.
Goodyear shares were down almost 4.6 per cent to $13.33 in late morning trading in New York.
Get alerts on Goodyear Tire & Rubber Co when a new story is published