UPDATE 1-Goodyear profit tops expectations, but outlook is cut
Feb 12 (Reuters) - Goodyear Tire & Rubber Co, the top U.S. tire maker, posted a stronger-than-expected quarterly profit on Tuesday but cut its 2013 forecast due to weakness in the European automotive market.
"As a result of our view of continued weakness in the European economy and its effects on the auto and tire industries, we are reducing our 2013 segment operating income expectation and are taking actions to ensure long-term competitiveness in the region," Chief Executive Richard Kramer said in a statement.
Goodyear, which said it would take steps to improve profit margins in Europe, expects long-term growth in the global tire industry at a slower pace near term than previously forecast. It anticipates its full-year tire unit volume for 2013 will grow at a low-single-digit percentage rate compared to last year.
The company broke even in the fourth-quarter on results available to common shareholders, compared with a profit of $18 million, or 7 cents a share, a year earlier.
Excluding one-time items, Goodyear earned 39 cents a share, almost double the 20 cents analysts polled by Thomson Reuters I/B/E/S had expected.
Sales fell 11 percent to $5.05 billion, below the $5.34 billion analysts had expected. Tire sales volume dropped 7 percent to 40 million, a steeper decline than the 3 to 5 percent drop the company forecast in October.
Goodyear said it now expects 2013 segment operating income of $1.4 billion to $1.5 billion, below the $1.6 billion it previously forecast. It blamed the weakness in Europe for the reduced outlook.
Goodyear said that over the next three years it will focus on increasing share in targeted market segments and emerging markets, and achieving productivity improvements in Europe totaling an additional $75 million to $100 million.
Last month, the company said it will exit the farm tire business in the Europe, Middle East and Africa region and initiated a plan to close the Amiens North plant in France, which makes consumer and farm tires.
When completed, Goodyear said the plan will cut about 6 million tires of high-cost capacity and result in about $75 million of annual profit improvement.
The company also said it will accelerate funding of U.S. pension plans and reduce its exposure to future interest rate and equity market movements. It intends to finance the additional pension contributions by accessing the debt capital markets.
As funded levels increase, Goodyear said it plans to shift its U.S. pension plan asset allocation to a portfolio of fixed income securities designed to offset the impact of discount rate movements on the plans' funded status.