Goodyear Tire & Rubber Posts $60-Million Loss

Goodyear Tire & Rubber incurred a loss of $60 million in the first quarter of this year due in large measure to devaluation of assets at its Celeron subsidiary, the world’s largest tire manufacturer reported.

The after-tax writedown of the Celeron oil and gas reserves was due largely to lower oil prices and amounted to $110.8 million, the company said. The company also noted that sluggish North American tire demand contributed to the quarterly performance.

In the first quarter of last year, Goodyear earned $86.7 million.

Excluding the writedown, Goodyear earned $50.8 million in the first quarter. The company’s revenue amounted to $2.33 billion and was up slightly from last year’s $2.29 billion.

Goodyear’s Chairman Robert E. Mercer said the company’s acquisition of Celeron in 1983 was designed to attain diversification and achieve potential profits higher than available in tire markets.

“For the long term, we remain in a strong position to achieve this despite the temporary setback,” Mercer said.

Oil companies generally have felt the crunch of declining oil prices.

Celeron, based in Lafayette, La., operates natural gas transmission systems primarily in Louisiana and also is involved in exploration programs.

Goodyear reported that tire sales were relatively stable worldwide. Mercer said the company faced price competition in the United States triggered by lower prices for petrochemical raw materials. Some dealers, he said, delayed orders in anticipation of declining prices.

While a sluggishness was noted in the replacement auto tire market, the company reported that sales to U.S. auto makers continued to show growth. In its industrial rubber, chemical and plastic products segments, sales were up slightly while operating income dropped slightly, Goodyear said.