Goodyear Expecting Break-Even 3rd Quarter
Goodyear Tire & Rubber Co. said it would break even or report a small loss for the third quarter, well below Wall Street forecasts, due to high raw material costs, a strong dollar and weak pricing. Analysts were expecting the company to post a profit of 29 cents a share. Goodyear’s announcement, the latest in a series of profit and sales warnings made by auto suppliers, pushed the company’s shares down $2.88, or 14%, to close at $18.13 on the NYSE. The world’s largest tire maker said fourth-quarter earnings could also be hurt if negative conditions persist. The company said its North American tire business was reaping benefits from a massive tire recall by Bridgestone/Firestone as consumers select Goodyear tires for replacements. But global economic and industry conditions have deteriorated beyond expectations, it said. A growing number of U.S. companies have forecast earnings weakness because of the strength of the greenback against the euro.
Separately, Snap-on Inc., maker of tools and other products for auto mechanics, said its earnings will fall short of estimates in the second half of the year because of a weak euro and high gas prices. The company expects third-quarter earnings of 45 to 50 cents a share, short of the 69 cents analysts expected. For the fourth quarter, the company sees earnings of 70 to 80 cents a share, rather than the 87 cents analysts forecast. The news sent Snap-on shares down $4.38 to close at $22.81 on the NYSE.
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