Costs, lower volumes drive Goodyear income down

Akron, Ohio — Goodyear reported double-digit declines in operating income for the three- and nine-month periods ended 30 Sept on the negative effects of lower sales volumes, higher raw materials costs and other factors.

Segment operating income fell 18.8% in the quarter to $294 million (€265 million) and 27.3% in the nine months to $703 million, Goodyear reported 25 Oct.

Revenue fell 3.2% in the quarter to $3.8 billion, driven by unfavourable foreign currency translation and lower third-party chemical sales, and 4.9% for the nine months to $11.6 billion.

Net income plunged 75% in the quarter to $88 million and 86.1% in the nine months to $81 million.

The firm's tire unit volumes totalled 40.3 million in the quarter, down 1% from 2018, as original equipment unit volume fell 5%, driven by lower global vehicle production, Goodyear said.

Replacement tire shipments increased 1%.

The company did not issue an overall outlook for the remainder of fiscal 2019, but chairman, president and CEO Richard Kramer said the company experienced "continued strength" in its US consumer replacement business and "solid growth" in Brazil.

The Americas business unit posted a 9.8% drop in operating income for the quarter on 2.8% lower revenue, Goodyear said.

Overall tire unit volume rose 0.6% to 40.3 million units, buoyed by 3% higher replacement tire shipments.

OE unit volume, on the other hand, fell 7%, reflecting lower North American vehicle production, including the impact of a strike at General Motors and "strategic fitment choices," Goodyear said.

Revenue in Europe/Middle East/Africa fell 6.6% to $1.21 billion, attributable primarily to lower volume and unfavourable foreign currency translation and partially offset by improved price/mix.

Kramer also noted that industry conditions in Europe were "softer than expected," and Goodyear continued to see negative impacts from "lack of alignment" throughout its distribution channels.

"In response, we expect to accelerate our plans to rationalise distribution in the region," Kramer said.

"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 tires over the next few years," he added.

Asia Pacific recorded a 3.2% rise in revenue to $548 million, reflecting higher volume and improved price/mix, Goodyear said.

Tire unit volume increased 5%, driven by growth in China, which Kramer attributed, in part, to the launch of several new OE fitments there that helped mitigate the impact of lower auto production.