DETROIT (AP) -- Shares of Goodyear Tire & Rubber Co. fell more than 10 percent on Friday as the company's third-quarter net income and revenue dropped on lower tire sales in Europe.
The Akron, Ohio, company's results fell short of Wall Street's expectations as problems in Europe offset cost cuts and profits in North America. Its executives said additional cuts are coming because of economic uncertainty.
Goodyear's numbers highlight a problem that is plaguing many global companies in auto-related businesses. Profits in North America are being offset by falling earnings in Europe as the region's economy continues to unravel on concerns about government debt. The same problem almost certainly will surface when General Motors Co. and Ford Motor Co. report earnings next week.
Goodyear reported net income of $110 million, or 41 cents per share, for the three months ended Sept. 30. That's down from $161 million, or 60 cents per share, a year earlier. Excluding one-time items such as restructuring costs and asset write-offs, the company made 53 cents per share. Analysts polled by FactSet expected 59 cents per share.
Revenue fell 13 percent to $5.26 billion as the slowing European economy cut tire sales. Analysts expected $5.87 billion.
The company's stock plummeted $1.28, or 10.4 percent, to close at $11.02 Friday. They are 19 percent above their 52-week low of $9.24 set in early June. They traded as high as $15.80 in January.
Chairman and CEO Richard J. Kramer said Goodyear still expects $1.6 billion in segment operating income and positive cash flow in 2013. But he said the company will have to change its methods of getting there, relying more heavily on North America and less on international operations than previously thought.
That means more cost cuts, focused on Europe and Latin America, to improve results, Kramer said on a conference call.
Goodyear is looking at different scenarios for cost cuts next year, Chief Financial Officer Darren R. Wells said.
"We're looking at what actions we're going to need to take to the extent we continue to see a soft-volume environment, and what actions we would have to take if the volume environment is even weaker than we expect," he said. The company, he said, will study manufacturing costs, particularly in Europe.
Goodyear said operating income in its North American tire business grew 67 percent to $130 million, even though it sold fewer tires. But tire income in Europe, the Middle East and Africa plunged almost 60 percent to $105 million. Operating income also fell in Latin America but rose slightly in the company's Asia Pacific region. Goodyear also said its global revenue per tire rose 5 percent over a year ago.
The company said in a statement that it has reached its cost-cutting target of $1 billion ahead of plan.
Goodyear said tire sales for the quarter totaled 41.8 million, down 12 percent from 2011 mainly due to weaker sales in Europe.
Spokesman Keith Price European stores stocked up on winter tires last year but didn't sell them due to a lack of snow. Now they've got inventory left to sell, plus they're cutting stockpiles due to the weak economy, Price said.
The company also was hit by unfavorable currency exchange rates and lower chemical sales in North America.
Goodyear said it expects fourth-quarter tire sales to remain soft, 3 percent to 5 percent below the 2011 figures.
For the full year in North America, the company expects the consumer replacement tire market to fall 2 percent to 3 percent, but demand from automakers for new-car tires will rise 8 percent to 10 percent. The commercial tire replacement market is expected to fall 6 percent to 8 percent, while original equipment sales will rise 6 percent to 8 percent.
Raw material costs are expected to rise about 7 percent for the year, Goodyear said.
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