Ashford W. Meikle, Staff Reporter
Managing director and board member of Goodyear Jamaica Limited, Peter Graham. - NORMAN GRINDLEY/STAFF PHOTOGRAPHER
MAJOR TYRE distributor and exporter, Goodyear Jamaica Limited, is experiencing growth in its core business, according to its interim three-month report to March 31, 2005.
"The quality of earnings is improving ... we're making more money from core earnings," said managing director, Peter Graham, in an interview with the Financial Gleaner.
To validate his point, the business executive drew attention to the healthy increase in Goodyear's operating profit for the first quarter. Its operating profit registered a 21 per cent increase over the comparative period in 2005, moving up to $32 million. The seven per cent dip in selling and distribution costs contributed to the increased operating profit.
Emphasising that he was "pleased with the results," Mr Graham said, "We have seen a fall in our finance income with interest rates trending down [but] we're now able to replace that with income from our core business. Our margins are improving." And, contributing to that improved margin was the healthy growth in the company's export business segment."
Exports are up by over 18 per cent and, according to Mr. Graham, Goodyear expects business in this segment "to continue to grow at double digits." The company re-exports tyres to some eighteen different markets in the French and Dutch Caribbean, the Dominican Republic and Haiti.
"We're covering the entire Caribbean ... we're finding that the smaller territories that used to place orders once a month are now ordering twice per month," explained Mr. Graham.
EXPORT SEGMENT
However, while Goodyear's export segment has grown significantly, the same cannot be said for its local market share. "Demand on the domestic market [is] below plan levels in February and March," commented Mr. Graham. To improve local operations, Goodyear has embarked on a major marketing thrust to target young motor vehicle owners, specifically in the 18-29 age group.
"When we segment the market ... the profile of a motor vehicle owner today has changed from what it was ten to fifteen years ago. The younger buyers are different. We want to appeal to this group," Mr. Graham said. Local artistes, TOK, have been contracted to lead the advertising campaign so that the company "can speak the language that these consumers speak."
He noted that the typical youth driver is usually attracted to the appearance of the product, followed by price and safety concerns. However, the managing director insisted that Goodyear is not "neglecting [its] mature consumers ... they are still with us." For this reason, the company will formally launch its extended mobility tyre (EMT) product (targeting the high end of the market) later this year.
For its first quarter Goodyear's revenues increased by three per cent to almost $284 million. The gross profit increased by two per cent, to $54 million, an increase due to an improvement in the mix of tyres sold. The company posted a four per cent increase in its net profit, which grew to $23 million.
The ensuing quarters are expected to be favourable for Goodyear. But the company has cautioned, "The price of crude oil continues to maintain near record high levels. Raw materials cost increases will impact product costs." At the same time, there is now a greater degree of regularity with overseas supplies, principally as a result of the reorganisation and upgrading of manufacturing facilities. Hence, for its regular supplies, Goodyear is now "way better than last year," said Mr. Graham.
