AKRON, Ohio (AP) - Goodyear Tire & Rubber Co. on Friday announced more cost cutting measures, including plant closures, that helped boost its shares to their highest in a year.
The nation's largest tire maker also reported that it swung to a first-quarter loss, due to continuing costs from a settled strike and lower sales in North America.
Goodyear spokesman Keith Price said the company will close more plants, but it has not identified which ones, how many or where. The company is closing a tire plant in Tyler, Texas, by the end of the year, but that is considered part of previously announced reductions, Price said.
The company said it lost $174 million, or 96 cents per share, in the quarter that ended March 31, compared with income of $74 million, or 37 cents per share, in the year ago period.
Shares of Goodyear closed up $1.91, or 5.9 percent, at $34.41, after hitting a new 52-week high of $35 earlier Friday on the New York Stock Exchange.
Goodyear's stock has soared since July, more than tripling to a recent seven-year high. Historically the stock was as high as $76.75 in 1998.
The surge followed Goodyear's decision to focus on higher-priced tires and end its lower profit private-label tire businesses, while cutting costs companywide.
Robert J. Keegan, chairman and chief executive officer, said Goodyear already has reduced annual production by 21 million tires, but wants to increase that figure to 25 million, saving the company $150 million by 2009.
The company needs to close plants to reach that goal.
'Additional savings are possible to the extent that production from the closed plants are transferred to existing facilities and/or are moved to low-cost countries,' Keegan said.
The company had first-quarter sales of $4.5 billion, up slightly from the $4.46 billion in the first three months of 2006.
When excluding special charges for the strike's effect, salaried benefit plans and other items, Goodyear said earnings for continuing operations were 11 cents per share.
The average estimate of analysts in a Thomson Financial survey was a loss of 2 cents per share. But the individual estimates ranged from 25 cents to minus 34 cents.
Goodyear still is feeling some effect of the three-month strike of Steelworkers late last year at North American tire plants. The company pegged the cost for the quarter at $34 million.
However, the company said production was restored ahead of schedule after the strike.
'Our focus on speed and the pace of change at Goodyear is having a meaningful impact,' Keegan said.
Goodyear reduced the estimated full-year impact of the strike to $100 million to $120 million, down from the previous estimate of $200 million to $230 million.
North American Tire sales were down 10 percent from the 2006 period, primarily due to reduced volume resulting from the strike and the exit from parts of the private-label tire business.
Goodyear also revised previously announced plans to reduce costs by more than $1 billion by the end of 2008. The new cost savings goal is $1.8 billion to $2 billion through 2009.
Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
© 2007 AFX News
