Goodyear reports €40m operating loss for first quarter

Akron, Ohio – Goodyear's first quarter sales fell 15% year-on-year in the first quarter of 2020 and the company fell into the red on an operating and net basis.

In a 30 April earnings call, Goodyear chairman, president and CEO Richard Kramer linked the sharp declines to lowered demand caused by Covid-19 pandemic.  

For the three months ended 31 March, Goodyear reported a segment operating loss of $47 million (€43 million), down from an operating profit of $190 million in 2019. 

In its preliminary reports earlier in April, Goodyear reported a loss before income taxes of $185 million to $195 million for the first quarter of 2020, and an adjusted loss before income taxes of $175 million to $185 million. 

At the time, the tire maker said the results included a $65 million unfavourable impact driven by “lower factory utilisation and other period costs, both directly related to shutting down its manufacturing facilities.”

The company also showed a net loss of $619 million ($2.65 per share), versus a net loss of $61 million (26 cents per share) from a year ago.

Goodyear sales for the first quarter stood at $3.1 billion, down 15% from 2019. The decline, it said, "was driven by lower industry volume and unfavourable foreign currency translation."

The increase in net loss was driven by discrete tax charges, a decline in segment operating income, and a non-cash goodwill impairment charge, partially offset by lower rationalisation charges, the company said.

Tire volumes totalled 31.3 million units, down 18% from the prior year's period.

Replacement tire shipments declined 16%, driven by "a severe contraction in industry demand following shelter-in-place mandates and sharp declines in consumer confidence," the company said.

Goodyear, Kramer said, has taken “swift actions to aggressively reduce expenses and investment levels.” 

In the Americas, Goodyear was break-even versus operating income of $89 million a year ago, while sales fell nearly 11% to $1.67 billion.

Elsewhere, sales in Asia/Pacific fell 23% to $388 million and 19% in Europe/Middle East to $995 million. Asia/Pacific's operating income fell 87% to $6 million, while Europe/Middle East posted a $53 million operating loss.

Original equipment unit volume decreased 21%, driven by declines in demand after global auto manufacturers suspended vehicle production in response to Covid-19.