Shares of Goodyear rose strongly Tuesday even as the Akron tire maker posted a $380 million loss for its fourth quarter.
But Goodyear’s adjusted fourth-quarter earnings showed a profit and beat analyst expectations as the company “deconsolidated” its Venezuela operations and had other one-time charges. Full-year segment income exceeded $2 billion and set a company record, Goodyear Tire & Rubber Co. said.
The company announced it also increased authorization to buy back shares of its stock by $650 million; total authorization is now $1.1 billion.
The company’s results marked the third consecutive year of record segment operating income.
“I’m extremely pleased with our outstanding results as we delivered 18 percent growth in full-year segment operating income, exceeding $2 billion for the first time in our 117-year history,” Richard J. Kramer, chairman and chief executive officer, said in a news release. “Fourth quarter earnings grew 16 percent in our North America business and 20 percent in Asia Pacific, both records. Earnings in Europe, Middle East and Africa recovered in the quarter despite a challenging environment.”
Goodyear reported losing $380 million, or $1.42 a share, on revenue of nearly $4.1 billion for the quarter ending Dec. 31. That compares to net income of $2.1 billion, or $7.68 a share, on revenue of nearly $4.4 billion a year ago.
But Goodyear took a one-time $646 million charge to deconsolidate operations in Venezuela as of Dec. 31.
“In future reporting periods, our financial results will not include the operating results of our Venezuelan subsidiary,” Goodyear said in its annual filing with the U.S. Securities and Exchange Commission.
Despite the write-down, the company said it will continue to maintain operations in Venezuela.
Goodyear’s Venezuelan subsidiary accounted for $119 million in segment operating income last year. Sales made up a third of Latin America’s net sales in 2015, Goodyear reported.
Taking into account one-time charges, Goodyear had adjusted net income of $257 million, or 93 cents per share, for the fourth quarter.
Shares were up 4.2 percent, to $27.45 at market’s close Tuesday. Shares are down 15.9 percent since Jan. 1 and are up 7 percent from a year ago.
Kramer said Goodyear’s three-year total shareholder return puts the company in the 94th percentile of Standard & Poor’s 500 companies over that period.
“This is an outstanding achievement and demonstrates our focus on creating shareholder value,” he said in a conference call with industry analysts.
The North America Tire unit had fourth quarter income of $266 million on revenue of $1.9 billion, up from $229 million a year ago. Revenue a year ago was $2.1 billion.
North America Tire sold 15.4 million tires in the fourth quarter, down from 16 million a year ago.
For the full year, North America Tire had income of more than $1.1 billion on revenue of nearly $7.8 billion, with 61.6 million tires sold. In 2014, the unit had income of $803 million on revenue of nearly $8.1 billion, with 61.1 million tires sold.
“Remember, we’re not pursuing volume for volume’s sake,” Kramer said.
Goodyear’s new e-commerce venture, where consumers can buy tires online at Goodyear.com and have them installed at a participating dealership, is doing well, Kramer said.
“Our early data indicates that we’re driving new business to our network of aligned dealers,” he said. “Nearly 70 percent of consumers who bought on Goodyear.com were new to the installing dealer.”
The company expects North America Tire — which is being combined with the company’s Latin America Unit to create a unified “Americas” division — will have moderate growth this year.
Goodyear’s factories are straining to meet demand for more profitable, high-value-added tires, Kramer said.
Latin America, particularly Venezuela, challenged Goodyear in 2015, Kramer and Laura Thompson, chief financial officer, told analysts.
Kramer said he remains confident that the Latin America market will rebound and that the company is “planting seeds” now in anticipation of a recovery there.
Venezuela is highly dependent on oil revenue. But its government and economy has been battered by low global oil prices, a recession, high inflation, devalued currency and more. Goodyear is among the corporations that cannot take cash out of the country.
For the full year, Goodyear had $16.4 billion in revenue, compared to $18.1 billion for 2014. The company said unfavorable foreign currency translation hurt 2015 sales by $1.6 billion.
Net income for the year was $307 million, or $1.12 a share. Adjusting for Venezuela and other one-time charges, net income for the year was $906 million, or $3.32 a share.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com. Follow him @JimMackinnonABJ on Twitter or www.facebook.com/JimMackinnonABJ.