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Booming US car sales did little to rev up sales and profits at US tyremaker Goodyear Tire & Rubber during the fourth quarter, prompting shares to fall more than 2 per cent in early trading.
The company, the US’s largest tyremaker, saw net sales drop 7.9 per cent to $3.7bn in the last three months of last year as it sold less tires in its all important Americas market.
Although Goodyear’s consumer tire business was boosted by the record light vehicle sales in the US, the gains were offset by weaknesses in its commercial tire business. Tyres sales to trucking companies have slumped in recent years as low fuel prices make freight transport less attractive.
The market had expected sales to come in at $3.87bn.
Net income was $561m for the quarter, compared to a loss of $380m in the prior period when results were marred by a large charge related to deconsolidation of its Venezuela operations.
Excluding this, adjusted net income decreased 3.1 per cent to $249m, or 95 cents per share, compared to $257m, or 93 cents per share, in 2015. However the drop beat analysts expectations of $226.8m.
Goodyear expects the tough trading conditions to continue this year. It said rising raw material costs would be a “significant headwind” and projects flat year-over-year segment operating income compared to 2016.
The company also confirmed its 2020 financial targets and capital allocation plan, which were announced in September.
Shares in Goodyear, up more than 18 per cent over the past 12 months, fell 2.2 per cent to $31.52 in early trading.