Goodyear Tire & Rubber Co reported on Tuesday a significant increase in quarterly profit driven by a one-time tax benefit, which made up for lower European sales amid warmer winter.
Net income for the three months stood at $2.13 billion, or $7.68 a share, compared with a profit of $228 million ,or $0.84 a share, a year earlier.
Performance was boosted by the release of a $2.2 billion US tax valuation allowance, which represented a one-time, non-cash benefit to earnings, the company said.
Excluding the tax boost net income was $166 million, or $0.59 a share, which was slightly above expectations of per-share earnings of $0.60.
However, the company said it does not expect to pay cash taxes in the US for the next five years although it would still record charges.
Revenue during the three months fell to $4.36 billion from $4.79 billion a year ago. Goodyear, maker of Dunlop, Sava and Fulda tires, said sales were hurt by $256 million due to unfavorable currency exchange rates.
Tire deliveries totaled 39.5 million in the quarter compared to 40.7 million units in the sames period of 2013. Original equipment tires, or units shipped directly to manufacturers, fell 1% as weakness persisted in Latin Americas industry.
Replacement tires slipped 4% as European customers purchased less winter tires due to one of the warmest winters on record.
The company also confirmed the launch of its e-commerce platform Goodyear.com, which was initially announced on a dealer conference on January 26. The website will allow customers in North America to purchase tires online and have them installed locally at a company retailer of their choice.
The website is expected to be launched later this year and Goodyear will become the first major tire manufacturer to offer such service.
During the quarter the company bought back $150 million worth of its shares, in line with its previously announced $450 million program.
Goodyear projected to reach 10% to 15% growth of operating profit in 2015 compared to the companys record of $1.7 billion in the past year, driven by robust momentum in North America.
Revenue in the region fell to $2.1 billion in the three months versus $2.13 a year ago, but operating profit jumped 15% to $299 million.
“Our continued performance validates the successful execution of our strategy,” said Chief Executive Richard Kramer.
Goodyear fell 1.14% on Friday and closed at $25.91 on the NASDAQ. On Tuesday to stock gained 2.35% to $26.52 at 15:33 GMT, marking a one-year decrease of 0.64%. The company is valued at $7.11 billion.
According to the Financial Times, the 7 analysts offering 12-month price targets for Goodyear have a median target of $30.00, with a high estimate of $35.00 and a low estimate of $20.00. The median estimate represents a 15.79% increase from the last closing price.
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