U.S.

Not A Good Year For Goodyear

February 8, 2002 / 11:51 AM EST / AP

The Goodyear Tire & Rubber Co. reported losses for the fourth quarter and the full year and said Friday it will cut 3,500 more jobs this year to reduce costs.

The $203.6 million loss for 2001 is the company's first annual loss since 1992.

The planned job cuts represent about 3.6 percent of its work force and follow the reduction of 10,000 positions in 2001. Goodyear's operations include a plant in Union City, Tenn., that employs about 2,500.

Goodyear said it also is changing its relationship with automakers, whose orders for new cars make up about 25 percent of sales. If automakers won't accept higher prices for those tires, Goodyear will drop some contracts, spokesman Keith Price said.

Executives told investors Friday that the world's largest tire maker could return to profitability, despite a weakened economy and slumping tire market. Union concessions, the changing relationships with automakers and higher prices for consumers bode well for 2002 earnings, said Sam G. Gibara, chairman and chief executive.

Goodyear reported Friday it lost $174 million, or $1.07 a share, for the October-December period. That included special charges of $126.9 million, or 78 cents per share.

Excluding special charges, Goodyear lost 29 cents per share. The consensus forecast of analysts surveyed by Thomson Financial/First Call was for a loss of 28 cents per share.

Fixed costs of running factories while reducing tire inventories were responsible for the loss, Gibara said.

"Had we not had an inventory reduction impact $154 million on cost in the fourth quarter, obviously we would have made money," he said.

Goodyear tried to cut costs last year by reducing inventories, limiting capital expenditures and selling noncore assets, in addition to cutting about 10,000 jobs - 2,200 more than the company predicted at the beginning of 2001.

This year's job cuts will include about 1,300 workers at an Australian joint venture that is closing two plants. The rest will come from Goodyear facilities.

In the fourth quarter of 2000, Goodyear lost $102 million, or 65 cents per share. That included $93.7 million in charges related to the plan to trim its work force.

Sales for the quarter were $3.4 billion, down from $3.5 billion the previous year.

"Depressed economic conditions, continued weak demand around the world and the cost of reducing production to align inventory levels accordingly had a significant impact on our results," Gibara said.

In late morning trading on the New York Stock Exchange, Goodyear shares rose 6.7 percent, or $1.44 a share, to $22.84.

For all of 2001, Goodyear had a loss of $203.6 million, or $1.27 per share, compared with a profit of $40.3 million, or 25 cents per share, in 2000.

Sales for the year were $14.1 billion, down 1.9 percent from $14.4 billion in 2000.

The company has about 96,000 employees and makes tires, engineered rubber products and chemicals in more than 90 facilities in 28 countries.