The Goodyear Tire & Rubber Company (GT) has reported a 9.78 percent fall in profit for the quarter ended Mar. 31, 2017. The company has earned $166 million, or $0.65 a share in the quarter, compared with $184 million, or $0.68 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $189 million, or $0.74 a share compared with $195 million or $0.72 a share, a year ago.
Revenue during the quarter went up marginally by 0.22 percent to $3,699 million from $3,691 million in the previous year period. Gross margin for the quarter contracted 157 basis points over the previous year period to 25.25 percent. Total expenses were 91.16 percent of quarterly revenues, up from 90.11 percent for the same period last year. That has resulted in a contraction of 105 basis points in operating margin to 8.84 percent.
"These results are a great outcome given an environment of rising raw material costs and weaker demand," said Richard J. Kramer, chairman, chief executive officer and president. "This solid performance is a result of the disciplined execution of our strategy," he added.
Operating cash flow remains negative
The Goodyear Tire & Rubber Company has spent $286 million cash to meet operating activities during the quarter as against cash outgo of $372 million in the last year period.
The company has spent $270 million cash to meet investing activities during the quarter as against cash outgo of $264 million in the last year period. It has incurred capital expenditure of $270 million on net basis during the quarter, up 7.14 percent or $18 million from year ago period.
Cash flow from financing activities was $398 million for the quarter, up 95.10 percent or $194 million, when compared with the last year period.
Working capital declines
The Goodyear Tire & Rubber Company has witnessed a decline in the working capital over the last year. It stood at $1,410 million as at Mar. 31, 2017, down 20.52 percent or $364 million from $1,774 million on Mar. 31, 2016. Current ratio was at 1.29 as on Mar. 31, 2017, down from 1.39 on Mar. 31, 2016.
Cash conversion cycle (CCC) has decreased to 11 days for the quarter from 50 days for the last year period. Days sales outstanding went down to 52 days for the quarter compared with 56 days for the same period last year.
Days inventory outstanding has decreased to 46 days for the quarter compared with 86 days for the previous year period. At the same time, days payable outstanding went down to 88 days for the quarter from 91 for the same period last year.
Debt comes down marginally
The Goodyear Tire & Rubber Company has recorded a decline in total debt over the last one year. It stood at $5,933 million as on Mar. 31, 2017, down 2.34 percent or $142 million from $6,075 million on Mar. 31, 2016. Total debt was 34.51 percent of total assets as on Mar. 31, 2017, compared with 36.21 percent on Mar. 31, 2016. Debt to equity ratio was at 1.20 as on Mar. 31, 2017, down from 1.40 as on Mar. 31, 2016. Interest coverage ratio deteriorated to 3.76 for the quarter from 4.01 for the same period last year.
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