AKRON, Ohio (AP) — Goodyear Tire & Rubber Co. said Friday that its third-quarter net income fell by nearly one-third as lower tire sales in Europe offset cost savings and higher North American profits.
The company's results fell short of Wall Street expectations, and it said in a statement that more cost cuts are coming because of economic uncertainty. No details were given.
The tire maker's results highlight a problem that is plaguing many global companies in auto-related businesses. Strong profits in North America are being erased by falling earnings in Europe as the region's economy continues to unravel on concerns about government debt.
Shares in the Akron, Ohio, company fell 71 cents, or 5.8 percent, to $11.59 in premarket trading.
Goodyear reported net income of $110 million, or 41 cents per share, for the three months ended Sept. 30. That's down from $161 million, or 60 cents per share, a year earlier.
Excluding one-time items such as restructuring costs and asset write-offs, the company made 53 cents per share. Analysts polled by FactSet expected 59 cents per share.
Revenue fell 13 percent to $5.26 billion as the slowing European economy cut tire sales. Analysts expected $5.87 billion.
Goodyear said operating income in its North American business grew 67 percent to $130 million, even though it sold fewer tires. But income in Europe, the Middle East and Africa plunged almost 60 percent to $105 million. Operating income also fell in Latin America but rose slightly in the company's Asia Pacific region. Goodyear also said its global revenue per tire rose 5 percent over a year ago.
Goodyear said it has reached its cost-cutting target of $1 billion ahead of its plan, but the company said it will take additional, unspecified actions.
"The structural improvements we made in our North American business are producing results," Chairman and CEO Richard J. Kramer said in a statement.
Goodyear said tire sales for the quarter totaled 41.8 million, down 12 percent from 2011 mainly due to weaker sales in Europe.
Spokesman Keith Price European stores stocked up on winter tires last year but didn't sell them due to a lack of snow. Now they've got inventory left to sell, plus they're cutting stockpiles due to the weak economy, Price said.
The company also was hit by unfavorable currency exchange rates and lower chemical sales in North America.
Goodyear said it expects fourth-quarter tire sales to remain soft, 3 percent to 5 percent below the 2011 figures.
For the full year in North America, the company expects the consumer replacement tire market to fall 2 percent to 3 percent, but demand from automakers for new-car tires will rise 8 percent to 10 percent. The commercial tire replacement market is expected to fall 6 percent to 8 percent, while original equipment sales will rise 6 percent to 8 percent.
Raw material costs are expected to rise about 7 percent for the year, Goodyear said.
