Goodyear Reports Third Quarter 2019 Financials

• U.S. consumer replacement shipments increased 3%; up 4% year to date
• Asia Pacific volume up 5%, driven by China
• Global commercial truck tire shipments continued to outpace industry
• Price versus raw materials positive for the first time in three years

AKRON, Ohio, Oct. 25, 2019 – The Goodyear Tire & Rubber Company today reported results for the third quarter of 2019.

“In the Americas, we saw continued strength in our U.S. consumer replacement business and solid growth in Brazil, giving us positive momentum in these important markets as we head into the final months of the year,” said Richard J. Kramer, chairman, chief executive officer and president. “Our Asia Pacific business improved in the quarter as we benefitted from the launch of several new OE fitments in China, which helped mitigate the impact of lower auto production. This is a testament to the strength of our technology and our success winning fitments on the right platforms,” he added.

“Industry conditions were softer than we anticipated in Europe and we continued to see an adverse impact from lack of alignment in our distribution channels. In response, we expect to accelerate our plans to rationalise distribution in the region. These actions, which will begin early next year, should improve the focus on our brands and ensure that we capture the full benefits of the investments we are making to increase the supply of premium, high margin tyres over the next few years,” said Kramer.

Goodyear’s third quarter 2019 sales were $3.8 billion, down 3% from a year ago, driven by unfavourable foreign currency exchange rates and lower third-party chemical sales.

Tyre unit volumes totalled 40.3 million, down 1% from 2018. Original equipment unit volume decreased 5%, driven by lower global vehicle production. Replacement tyre shipments increased 1%.

Goodyear’s third quarter 2019 net income was $88 million (38 cents per share), down from $351 million ($1.48 per share) a year ago. The decrease was driven by a $287 million net gain recorded during the third quarter of 2018 resulting from the company’s TireHub transaction. Third quarter 2019 adjusted net income was $105 million (45 cents per share), compared to $163 million (68 cents per share) in 2018. Per share amounts are diluted.

The company reported segment operating income of $294 million in 2019, down from $362 million a year ago. The decrease primarily reflects increased raw material costs, the impacts of lower volume, and the non-recurrence of a favourable indirect tax settlement in Brazil. These factors were partially offset by improved price and mix.

 Year-to-Date Results

Goodyear’s net sales for the first nine months of 2019 were $11.0 billion, a 5% decrease from the 2018 period due to unfavourable foreign currency exchange rates, lower volume and lower third-party chemical sales. These factors were partially offset by improved price and mix.

Tyre unit volumes totalled 115.7 million, down 2% from 2018. Original equipment volume decreased 8%, primarily due to lower global vehicle production. Replacement tyre shipments were effectively unchanged.

Goodyear ’s net income for the first nine months of 2019 was $81 million (35 cents per share), down from $583 million ($2.42 per share) in the prior year’s period. The 2019 period included several significant items, most notably $128 million in rationalisation charges, primarily related to the previously announced plan to modernise two tyre manufacturing facilities in Germany. Goodyear’s net income for the comparable period in 2018 included a $273 million net gain resulting from the company’s TireHub transaction. Adjusted net income for the first nine months was $208 million (89 cents per share), compared to $434 million ($1.80 per share) in the prior year’s period. Per share amounts are diluted.

The company reported segment operating income of $703 million for the first nine months of 2019, down from $967 million a year ago. The decrease primarily reflects higher raw material costs, lower volume and reduced earnings from other tyre-related businesses, partially offset by improved price and mix. 

Business Segment Results

Americas

The Americas’ third quarter 2019 sales of $2.0 billion were 3% lower than in the previous year, driven by lower third-party chemical sales. Tyre unit volume rose 1%. Replacement tyre shipments increased 3%, led by growth in the U.S. and Brazil. Original equipment unit volume declined 7%.  The reduction was driven by the U.S. business, reflecting lower vehicle production, including the impact of a strike at a major OE customer, and strategic fitment choices.

The third quarter 2019 segment operating income of $175 million was down 10% compared to the prior year. The decline was more than explained by a favourable indirect tax settlement in Brazil in 2018.

Europe, Middle East and Africa

Europe, Middle East and Africa’s third quarter 2019 sales decreased 7% from last year to $1.2 billion, primarily attributable to lower volume and unfavourable foreign currency exchange rates, partially offset by improved price and mix. Tyre unit volume decreased 6%. Replacement tyre shipments fell 5%, reflecting decreased industry demand and distribution challenges. Original equipment unit volume decreased 9%, attributable to lower vehicle production and strategic fitment choices.

The third quarter 2019 segment operating income of $66 million was 41% lower than the prior year’s quarter, driven by higher conversion costs, including the impact of lower factory utilisation, and lower volume.

Asia Pacific

Asia Pacific’s third quarter 2019 sales increased 3% to $548 million, primarily reflecting higher volume and improved price and mix, partially offset by unfavourable foreign currency exchange rates. Tyre unit volume increased 5%, driven by growth in China. Replacement tyre shipments increased 7%. Original equipment unit volume rose 2%.

The third quarter 2019 segment operating income of $53 million was down 7% from last year, driven by higher conversion costs, reflecting lower factory utilisation.

Source: Goodyear