Goodyear Tire & Rubber (NASDAQ:GT) said it broke even in the fourth quarter, as its European business weighed on earnings.
The company, which has worked to turn around its North American division, also announced plans to focus its efforts on cutting back its high-cost production in Europe and raised concerns about the region’s economy. Goodyear did not immediately provide details about the plans.
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“Given the deterioration in Europe, we have announced profit improvement plans to return the Europe, Middle East and Africa business to historical margins,” Goodyear CEO Richard Kramer said in a statement. “Our North America business is delivering well beyond our prior expectations, and we continue to target positive cash flow in 2013.”
Goodyear’s break-even in the latest period compares to a profit of $18 million, or seven cents a share, a year earlier. Adjusted per-share earnings to exclude one-time items, including the closure of a French plant, checked in at 39 cents to beat analysts’ projections of 20 cents.
Sales were $5 billion, an 11% drop year-over-year. Tire sales fell 7% to 40 million tires, largely driven by declining sales in Europe. Sales in Europe, the Middle East and Africa dropped to $1.6 billion from $1.9 billion, while the number of tires sold fell to 14.2 million from 16.9 million.
Goodyear subsequently lowered its outlook for overall operating income for 2013 to between $1.4 billion and $1.5 billion, down from its last forecast of $1.6 billion.
“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,” Kramer said.
Goodyear’s North American division also posted declines during the period. It sold 15.8 million tires, down from 16.6 million, and sales dropped to $2.31 billion from $2.58 billion.
The Asia Pacific tire division recorded sales of $588 million, down from $591 million. The number of tires sold increased to 5.2 million from 4.9 million.
Shares of Goodyear were down 53 cents, or 3.81%, to $13.38 a share Tuesday morning.