- Record full-year segment operating income of $1.6 billion, up 27%
- North America sets earnings records for fourth quarter, full year
- Free cash flow from operations of $1 billion for 2013, up 43%
The Goodyear Tire & Rubber Company today reported results for the fourth quarter and full-year of 2013.“Our outstanding fourth quarter and full-year earnings confirm that our strategy is working and demonstrate Goodyear’s ability to deliver sustainable earnings growth and strong free cash flow,” said Richard J. Kramer, chairman and chief executive officer. “Our North America business achieved record earnings in all four quarters of 2013.”
Goodyear’s 2013 annual sales were $19.5 billion, down 7 percent from 2012. Sales reflect $665 million in lower sales in other tire-related businesses, most notably third party chemical sales in North America; $354 million in unfavorable foreign currency translation; $166 million in lower tire unit volumes; and $206 million in lower price/mix. Tire unit volumes totaled 162.3 million, down 1 percent from 2012.
The company’s segment operating income of $1.6 billion was up 27 percent from 2012. Compared to the prior year, 2013 segment operating income reflects favorable price/mix net of raw materials of $436 million (excluding raw material cost savings), which more than offset $52 million in higher unabsorbed overhead costs, $63 million in unfavorable foreign currency translation and $24 million in lower tire volume.
Goodyear’s 2013 net income available to common shareholders of $600 million ($2.28 per share) is up from $183 million (74 cents per share) in 2012. All per share amounts are diluted.
The company generated more than $1 billion of free cash flow from operations, resulting from higher net income and a $415 million benefit from working capital.
Fourth quarter segment operating income of $67 million was up 18 percent from 2012. Segment operating income was positively impacted by favorable price/mix net of raw materials of $12 million, lower factory start-up costs of $14 million and $9 million in higher tire unit volumes, which more than offset $14 million in unfavorable foreign currency translation and $4 million in higher SAG expenses.
Outlook
The company reaffirmed its 2014-2016 financial targets, which include:
- Annual segment operating income growth of between 10 percent and 15 percent,
- Annual positive free cash flow from operations and,
- An adjusted debt to EBITDAP ratio of 2.5x.
Additionally, the company continues to expect about a 2 percent to 3 percent increase in unit volumes for 2014 over 2013.