(Updates with share price reaction.)
By Jeff Bennett
OF DOW JONES NEWSWIRES
DETROIT -(Dow Jones)- Goodyear Tire & Rubber Co. (GT) reported its first profit in four quarters but saw its market value fall by a quarter in early trading.
The tire maker beat analyst expectations amid lower raw materials costs and job cuts and forecast a return to industry growth in 2010.
However, its shares fell from the open and were recently trading down 24.5% at $12.63.
Earnings were $72 million, or 30 cents a share, compared with a profit of $31 million, or 13 cents a share, for the same period a year earlier, the Akron, Ohio, company said in a statement Wednesday. Sales fell 15% to $4.39 billion from $5.17 billion for the same period a year earlier.
Excluding items, Goodyear reported a profit of 45 cents a share, exceeding the average analyst estimate of 40 cents a share, according to a survey by Thomson Reuters.
The largest North American tire maker has struggled with the downturn in demand as consumers slow their purchases of new vehicles and delay tire replacement.
The company received a boost from falling oil prices, which reduced the cost of synthetic rubber and other tire building products such as carbon black. Goodyear said it saved $207 million on raw material expenses compared with the same period a year earlier.
Goodyear has moved aggressively to slash jobs in higher cost plants. It cut 300 positions during the third quarter which is in addition to the approximately 5,500 jobs cut in the first half of the year. The company's full-year target was a reduction of 5,000 jobs.
The company also achieved $195 million in new savings during the third quarter, for a total of $540 million in the first nine months of 2009.
Goodyear plans to trim another $215 million in expenses under a new four-year union contract reached with the United Steelworkers late last month.
The union deal relaxes work rules, ends the defined pension benefit plan and leaves the Union City, Tenn., plant in an "unprotected status," meaning Goodyear could shut the facility.
Lack of auto maker demand for products hurt Goodyear across all of its segments.
In North America, Goodyear sold 1 million fewer tires as auto maker sales fell 21% compared with the same period a year earlier. The company shipped 17.1 million tires as auto makers cut production during the economic slowdown. Consumer replacement tire shipments rose less than 1%. Sales in Goodyear's North America unit fell 15% to $1.86 billion.
The number of tires shipped in the company's Europe, Middle East and Africa unit fell to 17.8 million from 19.7 million as auto maker sales dropped 20%. Sales fell 18% to $1.58 billion. Consumer replacement tire shipments fell 6%.
Latin America's tire volume fell slightly to 5 million from 5.3 million. Auto maker sales dropped 8% and sales fell 16% to $486 million. Consumer replacement tire shipments fell 7%.
-By Jeff Bennett, Dow Jones Newswires; jeff.bennett@dowjones.com; 248-204-5542