The Firestone Tire & Rubber Co. yesterday reported $52 million loss for the second quarter of its fiscal year and warned that it doesn't expect results to improve substantially until the slumping automobile industry and the slowing turn around.
The nation's No. 2 rubbermaker said the loss amounted to 90 cents a share on sales of $1.29 billion for the quarter ended April 30. Firestone earned $32.6 million (57 cents a share) on sales of $1.35 billion in the second quarter last year.
The decline in profits resulted primarily from sharply lower demand for tires and other products used by the domestic automobile industry, Chairman Richard A. Riley said.
For the first six months of its fiscal year, Firestone said it lost $65.8 million ($1.14) on sales of $2.46 billion. That compares with earnings of $67.4 million ($1.17) on sales of $2.56 billion in the first half last year.
The second-quarter loss included $49 million (85 cents) in after-tax charges for previously announced plant closings in Dayton, Barberton and Akron, Ohio Los Angeles and Salinas, Calif.; Pottstown, Pa.; and Whitby, Ontario.
Excluding the plant closings, the loss for the second quarter was $3 million (5 cents), and the loss for the first six months was $16.8 million (29 cents), Firestone said.
"We believe that our actions to reduce capacity and to implement cost-reduction programs will ultimately benefit our results, but no substantial improvement will be achieved until the automobile industry makes a comeback and the economy as a whole demonstrates sustained improvement," Riley said.
The layoffs will costs 7,390 jobs in addition to the 1,575 employes who already were laid off at the time the plant, closings were announced in March. The layoffs will begin June 2 and continue through October.
Riley said that because of stiff competition, rising costs of raw materials -- especially those that are are petroleum related -- haven't been fully recoverable in sales prices.
He also said international results were hurt when Firestone failed to get government approval for price hikes it sought in Venezuela and Brazil.