Goodyear Tire & Rubber Co reported stronger-than-expected quarterly profit on Friday with price hikes offsetting the rising cost of raw materials and favorable exchange rates.
The biggest U.S.-based tire maker beat Wall Street expectations and said it earned $147 million, or 60 cents per share, in the quarter that ended March 31 compared with a loss of $174 million, or 96 cents per share a year ago.
Sales rose to $4.94 billion in the quarter from $4.5 billion a year ago.
Analysts surveyed by Thomson Financial expected Goodyear to post earnings of 47 cents per share. Such estimates usually exclude special items.
Goodyear said the slowing U.S. economy still remained a concern and it would likely cut production by 5 million tires in North America throughout the year to match lower demand from vehicle manufacturers.
While few businesses are immune to the effects of a weaker U.S. economy, and we have certainly experienced weaker conditions in our industry particularly in the OE (original equipment) business, we continue to be confident about the attractive market opportunities we see and our company's ability to fully capitalize on them, Robert Keegan, Goodyear's chairman and chief executive, said in a conference call with analysts.
Goodyear shares rose $1.78, or 6.5 percent, to $29.03 in after trading Friday. The shares have traded in a one-year range of $22.27 to $36.90.
International sales were the major force behind the quarters positive results. Sales in Europe, the Middle East, and Africa, were up 17.6 percent, to $2 billion. Sales in the Asia Pacific were up 21.2 percent to $465 million. Sales in Latin American sales rose by 29.3 percent, to $530 million. The number of tires sold decreased in all regions except for the Asia Pacific
Foreign currency translation added $341 million to sales and $27 million to operating income, the company said.
Sales in the United States are still weak due to the troubled economy, and dropped by 1 percent, to $1.99 billion.