On October 29, 2012, Goodyear Tire & Rubber Company released its third quarter 2012 results. Richard J. Kramer, Goodyearâ€™s president and chief executive officer, said: â€œGoodyearâ€™s North American business performed well in the third quarter of 2012 and contributed to significant global revenue growth. The macroeconomic situation in the European market It is still grim and has caused a certain impact on tire sales in the region. We have accordingly taken active and effective countermeasures to maintain a stable profit.â€
Mr. Kramer pointed out that according to the third-quarter 2012 results, Goodyear has basically completed the $1 billion cost reduction target in advance. However, due to the unclear economic outlook, the company will further increase the implementation of cost reduction measures and over-complete the three-year cost reduction target.
â€œThe North American business structure optimization measures have already been effective and will push the regionâ€™s performance back to the fast-growing track. The company will continue to try to complete and exceed its 2013 revenue target one year in advance,â€ Mr. Kramer added.
He added: "Goodyear's outstanding performance during 2012 fully demonstrated our ability to maintain profitability and help shareholders achieve sustainable value growth in different economic cycles. We will continue to strengthen our efforts in 2013. The performance goal of achieving $1.6 billion in revenue and cash flow growth continues to advance."
Goodyear's third-quarter sales of $5.3 billion in 2012 were down 13% from its highest point in the same period last year. Mainly due to the decline in tire sales and adverse exchange effects. In the third quarter of 2012, sales of tires totaled 41.8 million, a 12% decrease compared to the same period in 2011. The decline in sales in Europe was the main reason for this. However, thanks to the continuously optimized product pricing system and product mix, the single-quarter profit in the third quarter of 2012 was up 5% from the year-ago period in 2011 after the exchange rate effect was removed.
Goodyearâ€™s operating income for the third quarter of 2012 was US$348 million, a decrease of US$115 million compared to the same period of last year. Improvements in product pricing systems and product mix contributed US$159 million in third-quarter revenue, which fully offset the cost of raw materials. The additional 47 million U.S. dollars in additional expenses (not counting the positive impact of cost reduction measures).
Asia Pacific Tire Business Results - Revenue Growth
In the third quarter of 2012, sales of tires business in the Asia Pacific region were US$592 million, down 6% year-on-year, of which replacement tire sales fell 4% year-on-year, and supporting tire sales remained flat year-on-year. Excluding exchange rate effects, the single-quarter profit in the third quarter of 2012 was basically the same as in the same period of 2011.
In the third quarter of 2012, Asia Pacificâ€™s operating income was US$64 million, which was an increase of 2% compared to the same period last year. Among them, the improvement in product pricing system and product mix and the reduction in raw material costs brought in revenue growth of US$2 million and US$12 million, respectively. Goodyear terminated all operations of the original Dalian plant in the third quarter, replacing it with a larger new factory in Pulandian; the related costs of starting the new plant, rising salaries and other costs of employees, and unfavorable foreign exchange translation affect to some extent Third quarter operating income.
The first three quarters of 2012
Goodyearâ€™s total sales for the first three quarters of 2012 were US$16 billion, a decrease of 7% compared to US$17 billion in the same period of 2011. Excluding the impact of exchange rates, the strong product pricing system and product mix promoted single-unit profits to increase by 10% year-on-year in the first three quarters of 2012. Goodyearâ€™s operating income for the first three quarters of 2012 was US$976 million, a decrease of US$196 million compared to the same period last year.
Compared with the same period of 2011, product pricing and product mix improvements contributed $997 million in revenue growth in the first three quarters of 2012, easily offsetting the $578 million in costs associated with rising raw material costs, including both cost and cost reductions. The initiatives involved 189 million yuan in expenditure.
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