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Strong Demand Reduces Goodyear Tire Q1 Loss - Update

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Tire manufacturer Goodyear Tire & Rubber Co. (GT) on Wednesday posted a narrower loss for the first quarter, aided by strong demand, despite a one-time charge related to the currency devaluation in Venezuela.

The Akron, Ohio-based company's first-quarter net loss was $47 million or $0.19 per share, compared to a loss of $333 million or $1.38 per share in the year-ago quarter.

On average, 7 analysts polled by Thomson Reuters expected the company to post a loss of $0.02 per share. Analysts' estimates typically exclude special items.

The latest quarter results were impacted by charges of $99 million or $0.41 per share resulting from the devaluation of the Venezuelan bolivar fuerte in January 2010, costs related to a debt exchange offer of $5 million and $5 million due to rationalizations, asset write-offs and accelerated depreciation; and gains of $8 million on asset sales, $8 million related to settlements with certain suppliers and $5 million resulting from various discrete tax benefits.

Quarterly net sales totaled $4.27 billion, 21% higher than the previous year's net sales of $3.54 billion, and breezed past the $3.99 billion consensus revenue estimate of two Wall Street analysts.

The 21% uptrend in first-quarter sales reflects the $399 million impact of a 14% rise in tire unit volume due to improved global demand and growth in emerging markets. Sales were also positively impacted by $224 million in favorable foreign currency translation and by $125 million from higher sales in other tire-related businesses, primarily third-party chemical sales in North America.

Richard Kramer, president and chief executive officer of Goodyear, said, "As markets around the world continue to improve, we are starting to see the benefits of the strategic actions we took last year, including our commitment to launch innovative new products during an economic downturn. The strategic actions contributed to strong growth in both sales and earnings, positioning us well as the global economy continues its recovery."

North American Tire's first quarter 2010 sales rose 15% to $1.8 billion from $1.5 billion a year ago, reflecting a 9% growth in tire unit volume and strong price/mix performance. Sales were positively impacted by $121 million from higher sales in other tire-related businesses, primarily third-party chemical sales.

Europe, Middle East and Africa Tire's first quarter sales increased 21% to $1.5 billion from $1.3 billion last year, primarily due to a 14% increase in tire unit volume and favorable foreign currency translation.

First quarter sales at Latin American Tire totaled $478 million, an increase of 25%, compared to $383 million reported a year earlier, driven by a 21% upswing in tire unit volume.

Asia Pacific Tire's first quarter sales increased 42% to $484 million from $341 million last year, largely due to a 27% increase in tire unit volume and favorable foreign currency translation.

GT shares, which have been trading between $9.63 and $18.84 in the past 52 weeks period, are currently trading at $15.09, up $1.06 or 7.69%.

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