The Goodyear Tire & Rubber Company (GT - Analyst Report) reported a 5% increase in adjusted earnings per share to 84 cents in the second quarter of 2015 from 80 cents a year ago (all excluding special items). Moreover, earnings comfortably surpassed the Zacks Consensus Estimate of 74 cents. Adjusted net income improved 1.8% to $229 million from $225 million in the second quarter of 2014.

The Goodyear Tire & Rubber Company - Quarterly EPS | FindTheBest

Including special items, the company reported net income of $192 million or 70 cents per share in the quarter, down from $213 million or 76 cents per share recorded a year ago.

Revenues in the quarter fell 10.6% year over year to $4.2 billion. However, the figure surpassed the Zacks Consensus Estimate of $4.08 billion. The year-over-year drop in revenues can be attributed to unfavorable foreign currency translation.

Tire unit volumes improved 1% to 40.8 million in the second quarter of 2015. Original equipment unit volume moved up 4%, while replacement tire shipments went down 1%.

Segment operating income increased 21% to a record $556 million in second-quarter 2015 from $460 million a year ago. The year-over-year rise was driven by favorable price/mix net of raw materials and cost-reduction initiatives, partially offset by inflation and unfavorable foreign currency translation.

Segment Details

Revenues at the North America segment declined 1% year over year to $2.03 billion. The deterioration was due to third-party chemical sales, which offset the 3% increase in tire unit volume that came in at 15.8 million units. Original equipment unit volume went up 9% year over year. Also, replacement tire shipments rose 1%.

Revenues from the Europe, Middle East and Africa segment decreased 20% to $1.3 billion. Revenues were mainly hurt by unfavorable currency translation, along with a decline in tire unit volume. Tire unit sales dropped 2% to 14.8 million units. Original equipment unit volume was down 2%. Replacement tire shipments also declined 2% year over year.

Sales in the Latin America segment fell 20% to $390 million due to unfavorable foreign currency translation and a decrease in tire unit volumes. Tire unit sales dropped 4% to 4.2 million units. Original equipment unit volume decreased 11%, while replacement tire shipments declined 2% year over year.

Revenues from the Asia-Pacificsegment fell 10% to $491 million due to unfavorable price/mix and foreign currency translation. This was partly offset by a 5% increase in tire unit volume to 6 million units. Original equipment unit volume was up 11%, while replacement tire shipments improved 1% year over year.

Financial Position

Goodyear had cash and cash equivalents of $1.64 billion as of Jun 30, 2015, down from $2.16 billion as of Dec 31, 2014. Long-term debt and capital leases amounted to $6.07 billion as of Jun 30, 2015, down from $6.36 billion as of Dec 31, 2014.

Cash flow from operations amounted to $274 million in first-half 2015 compared with cash outflow of $1.13 billion in the year-ago period. Meanwhile, capital expenditure stood at $448 million compared with $441 million in the same period a year ago.

Share Repurchase

Goodyear repurchased 1.6 million shares for $50 million during the second quarter.

Dividend Update

On Jul 15, 2015, Goodyear announced a quarterly dividend of 6 cents per share, payable on Sep 1, to shareholders on record as of Jul 31, 2015.

Guidance

For the period 2015–2016, Goodyear expects annual segment operating income to increase 10–15%. The company also aims to achieve positive annual free cash flow over this period.

Goodyear is one of the largest tire manufacturing companies in the world. The company currently carries a Zacks Rank #2 (Buy).

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