Goodyear on Tuesday reported second-quarter profits that were than more double those of last year and beat Wall Street estimates.
The Akron tire company’s profits set a record for the quarter, even as sales declined.
Shares of the company increased 9 percent to close Tuesday at $18.56. Earlier in the day, shares had increased 15 percent to $19.60 — the biggest intraday gain since April 2011 and highest intraday price since September 2008.
“In what remains a tough global economy, our team delivered in the quarter,” Goodyear’s CEO Richard Kramer said on a conference call with analysts.
“Tough decisions, disciplined behavior and commitment of our strategy are paying off,” he said.
The company introduced several new tires during the quarter, has “strong cash generation,” and is seeing cost reductions “taking hold,” Kramer said.
Kramer was referring to cost reductions involving raw materials and manufacturing.
The company, with 3,000 employees in Akron, reported that profits rose to $181 million, or 67 cents a share, for the second quarter.
That’s a second-quarter record, and up from net income of $85 million, or 33 cents a share, for the year-ago quarter.
After one-time charges, Goodyear earned 76 cents per share, beating the estimate of 48 cents per share compiled by business research firm FactSet, according to the Associated Press.
Industry analyst Itay Michaeli, with Citigroup Inc., wrote in a report that, “Our initial view is that Goodyear delivered on all fronts, and then some” for the quarter.
Michaeli rates Goodyear shares a “buy.”
Goodyear reported Tuesday that all four of its business segments — North America; Europe, Middle East and Africa; Latin America and Asia Pacific — had higher operating income in the second quarter compared with the year-ago period.
North America was the only business segment to see a decline in tire shipments in the quarter.
Goodyear’s critical North American unit had operating income of $204 million — up 8.5 percent from the year-ago period.
Sales in the unit — Goodyear’s largest — decreased 10 percent to $2.2 billion as tire shipments dropped 3 percent from 15.4 million to 14.8 million.
Replacement tire sales were down 5 percent, with the company attributing the decline to weaker demand from dealers and decreased sales of less expensive consumer tires. Original equipment sales were flat.
“The steady delivery of improved results in North America has been remarkable in such a low-volume environment,” Goodyear’s Chief Financial Officer Darren Wells said on the conference call with analysts.
Goodyear said it continues to expect that tire shipments for all of 2013 won’t rise, and will essentially match 2012 levels.
For the full year, the company expects operating income of all of its four business segments to be about $1.5 billion — at the high end of its previous forecast of $1.4 billion to $1.5 billion.
Kramer noted that the $1.5 billion would be the company’s highest ever annual global operating income.
Sales for the company for the second quarter declined 5 percent to $4.9 billion, from $5.2 billion a year ago.
Sales for the second quarter reflect $35 million in higher tire shipments that were more than offset by $131 million in lower sales in other businesses, including third party chemical sales in North America; $60 million in unfavorable foreign currency translation; and $75 million in price and product mix.
Goodyear and the United Steelworkers union reached a tentative agreement on a new labor contract for workers at six plants last Saturday.
The company and the union are not revealing details of the tentative agreement, pending a vote by the union membership. Union members went on strike in 2006 for three months.
The Associated Press and Bloomberg News contributed to this report.