Goodyear Tire & Rubber Co (NasdaqGS: GT – news) ‘s quarterly profit more than doubled due to lower raw material costs and stabilizing sales in Europe, where many customers have bought new tires for the summer for the first time in years.
Shares of the No. 1 U.S. tire maker rose 12 percent to their year-high of $19.15 (12.53 pounds) on the Nasdaq on Tuesday morning after the company reported stronger-than-expected results, which followed positive comments about the European market from Ford Motor Co (NYSE: F – news) last week.
Goodyear forecast operating income across its four business units this year would at the higher end of its previous forecast between $1.4 billion and $1.5 billion.
Economic woes across much of Europe has sent auto sales there to 20 year lows, hitting tire makers along with the rest of the automobiles industry.
“We anticipate … a 3 to 5 percent (volume) increase in the third quarter driven by continued improvement in emerging markets and slow but steady recovery in mature markets,” Chief Executive Officer Richard Kramer said in a statement.
Net income doubled to $181 million, or 67 cents per share, in the second quarter, from $85 million, or 33 cents per share.
Excluding items, the company earned 76 cents per share.
“We reported $177 million of reduced raw material costs during the quarter,” Kramer said on a post-earnings call.
Revenue decreased 5 percent to $4.89 billion.
Analysts on average had expected earnings of 48 cents per share on revenue of $4.88 billion, according to Thomson Reuters I/B/E/S.
Volume rose 1 percent to 39.5 million tires from a year earlier.
Goodyear shares have risen about 23 percent from the start of the year to Monday’s close.
(Reporting by Mridhula Raghavan in Bangalore; Editing by Joyjeet Das)
Source: Reuters
