Goodyear Tire & Rubber (NYSE:GT) said on Monday that its much stronger-than-expected third-quarter profit set a new company record, led by higher prices for its tires.
Sales for the three-month period were $6.1 billion, up 22% from a year ago. While revenue was the company’s highest-ever, it still slipped below average analyst estimates polled by Thomson Reuters of $6.22 billion.
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The increase in sales was led by strong price/mix performance, which drove revenue per tire up 18% from the year-earlier period, partially offset by flat tire unit volumes of 47.7 million.
The retailer has been focusing on higher-priced premium tires, which proved a successful strategy as the segment gained $739 million in operating income during the period, more than offsetting a $554 million increase in raw materials.
The Akron, Ohio-based maker of tires and related products posted net income for the third quarter of $161 million, or 60 cents a share, compared with a year-earlier loss of $20 million, or 8 cents a share, in the same quarter last year.
Excluding one-time items, the company earned 72 cents a share, which widely trumped the Street’s view of 27 cents.
"Our third quarter results are another step on the path toward our 2013 targets and especially meaningful given the challenging market conditions in much of the world," Goodyear CEO Richard Kramer said in a statement.
Goodyear expects commodities costs to rise more than 30% in the current quarter from last year and rubber and raw materials costs to climbed 30% for the full year.
However, offsetting some cost pressures, the tire maker predicts sales in the fourth quarter will continue to show the same robust growth as they did in the first nine months of the year.