Goodyear Tire & Rubber Company (GT) announced that it has completed sale of its Latin American farm tire business to Titan Tire Corporation, a subsidiary of Titan International Inc. The tire maker announced agreements to sell the Latin American business in December 2010.
The business, valued at $99 million, includes Goodyear’s manufacturing plant in Sao Paulo, Brazil, property, equipment and inventories, and a licensing agreement. The licensing agreement will allow Titan to sell Goodyear-brand farm tires in Latin America and North America.
In December 2010, Goodyear also announced that it would sell its European farm tire business to Titan. However, the transaction is not yet completed.
Goodyear, a Zacks #3 Rank (Hold) stock, revealed a 32% decline in profit to $21 million or 7 cents per share (excluding special items) in the fourth quarter of 2010 from $31 million or 14 cents per share in the same quarter of 2010. However, the company fared well compared with the Zacks Consensus Estimate of a loss of 7 cents per share during the quarter.
The decline in profit was primarily attributable to higher raw material costs, increased selling, administrative and general expenses and unfavorable currency translation effects. The company’s cost of goods sold increased 17% to $4.19 billion, while selling, administrative and general expenses rose12% to $715 million.
Sales during the quarter appreciated 14% to $5.07 billion, higher than the Zacks Consensus Estimate of $4.88 billion. It was backed by a 4% increase in tire volume to 45 million units, which positively affected sales by $130 million.
The company’s sales in the Latin American Tire segment went up 15% to $582 million reflecting a 1% decline in tire unit volume and a strong price and product mix. OE unit volume in the segment rose 2% while replacement tire unit shipments declined by the same magnitude. Operating income increased $12 million to $93 million due to volume and price/mix in Brazil and other markets outside of Venezuela.
For full year 2010, Goodyear posted a narrower loss of $216 million or 89 cents per share in 2010 versus $375 million or $1.55 per share in 2009. This compared with the Zacks Consensus Estimate of a profit of 37 cents per share.
Sales in the year zoomed 16% to $18.8 billion reflecting an 8% improvement in tire unit volume, increase in sales in other tire-related businesses, primarily third-party chemical sales by North American Tire and better price/mix, offset partially by unfavorable currency translation effects.
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