Created: 10/29/2013 10:05 AM
(AP) CLEVELAND - Goodyear Tire & Rubber Co.’s third-quarter profit rose 51 percent on strong performances in Latin America and North America, the tire maker said Tuesday.
But shares dropped 7.5 percent in late morning trading as the company’s sales dropped 5 percent, to below the level Wall Street expected.
Akron-based Goodyear said it earned $166 million, or 62 cents per share, for the July-September period. Excluding charges, Goodyear earned 68 cents per share, beating the Wall Street estimate by 1 cent.
Revenue fell to $5 billion from $5.26 billion, hurt by a drop in chemical sales in North America and changes in the value of Asian currencies. Analysts polled by FactSet expected higher sales of $5.27 billion.
Chairman and CEO Richard J. Kramer said the company expects operating income for the year of more than $1.5 billion. It had predicted $1.4 billion to $1.5 billion.
"As the industry continues to recover, we see strong volume growth in the segments we are targeting," Kramer said in a statement.
Goodyear sold more tires in North America and was aided by a shift in Latin America to higher-value replacement tires. Tire sales rose about 1 percent in North America, 3 percent in Europe-Middle East-Africa and 8 percent in Asia-Pacific.
Latin America tires sold fell 4 percent, but operating income rose 82 percent to $89 million, helped by lower raw material costs.
The company had announced in September that it was reinstating its quarterly dividend after more than a decade. It is also starting a share buyback of up to $100 million.
But last week Deutsche Bank downgraded its rating on Goodyear to "Hold" from "Buy" and lowered its target price on the stock to $26 from $29 based on concerns about margins over the next few years.
Goodyear shares dropped $1.66 to $20.39 in late morning trading. The stock had gained 60 percent this year.