Goodyear Posts Higher Sales, Despite Jump in Costs

The Akron, Ohio-based company said organic sales, which strip out the effects of acquisitions and currency impacts, rose 20% from a year earlier. Net sales jumped 40%, driven by the acquisition of Cooper Tire & Rubber Co., which closed in June of last year.

In the Americas, where sales rose 63%, price increases outpaced higher costs on everything from raw materials to wages and transportation.

“We believe our average real market prices have increased significantly more than our major competitors,” Chief Financial Officer

Darren Wells

said on a conference call with analysts.

He added that the company raised prices earlier than rivals and will likely need to do so again later this year as costs continue to rise.

Revenue per tire, excluding currency impact, rose 17%, the company said. The total cost of goods sold rose about 44% to $4 billion.

Goodyear

GT -9.49%

stock fell more than 6% to $12.69 a share in midday trading.

Raw material costs in the current quarter are expected to be $400 million higher than in the year-ago period. The year-over-year increase in transportation and energy costs is expected to be $20 million to $30 million higher than in the recently ended quarter, the company said.

Goodyear

said it also expects a roughly $10 million impact from plant closures in China, assuming no further shutdowns.

Overall for the three months ended March 31, the company posted a profit of $96 million, or 33 cents a share, compared with $12 million, or 5 cents, a year earlier.

Stripping out one-time items like asset sales, adjusted earnings were 37 cents a share. Analysts surveyed by FactSet were expecting adjusted earnings of 23 cents a share.

Quarterly sales of $4.91 billion, meanwhile, topped analysts’ expectations of $4.73 billion.

Write to Will Feuer at [email protected]