Lower volumes, weak truck industry impact Goodyear third quarter results

Akron, Ohio – Goodyear Tire & Rubber Co. has seen US tire maker sees its third quarter results hit by lower volumes, particularly in Americas, and Europe, Middle East and Africa (EMEA).

Sales for the quarter to the end of September were down 3.2% year-on-year to $5.1 billion (€4.7 billion), reflecting a 5.3% lower replacement volume, said Goodyear 6 Nov.

Revenue was also hit by the impact of low-cost imports in Latin America; residual effects of tornado at Tupelo facility and “continued weakness” in the commercial truck industry.

The headwinds, said Goodyear, were partially offset by strong growth in premium segments of the US market, while EMEA results reflected “continued channel destocking” during the quarter.

Overall, Goodyear reported a 2.8% year-on-year decline in volumes to 45.3 million units during the quarter, reflecting a 5.3% decline in replacement shipments, partially offset by a 5.7% increase in OE demand.

Goodyear reported a net loss of $84 million for the quarter, down compared to net income of $48 million last year.

The tire maker linked the decline primarily to higher rationalisation costs of $153 million, including cuts in Europe to improve cost structure and a change of operating model in Asia Pacific.

Third quarter segment operating income came in at $336 million, down nearly 10% compared to the previous year, partly due to a fire at Debica, Poland facility (ERJ report) and the storm at Tupelo (ERJ report).

The effects of lower sales and volumes were partially offset by improved price/mix of $22 million and lower raw material costs of $140 million.

Breaking down regions, Goodyear noted a 15.7% decline in year-on-year operating income to $258 million in Americas, on 5.6% lower sales of $3.1 billion.

Revenue in the region was particularly hit by “commercial weakness” and lower sales in other-tire related businesses – mainly third-party chemical sales.

Segment operating income reflected a $21 million effect of lower volumes and sales as well as unabsorbed overhead from lower production in the second quarter.

Raw material cost decreases of $95 million more than offsetting a negative price/mix of $44 million in the region, driven by weaker commercial business.

In EMEA, earnings remained below historical levels due to “continued industry volume weakness and elevated inflation,” said Goodyear.

“At the same time, results also reflect strong price/mix performance and the benefit of lower raw material costs," it noted.

Lower raw material pricing also helped drive a sequential improvement in earnings, the tire maker added. 

Consumer replacement industry volumes remained soft on continued destocking, with Goodyear’s market share remaining flat versus prior year.

Commercial truck volumes declined 11% in the region, also reflecting “weak industry conditions and increased competition from low-cost imports.”

Overall, Goodyear reported a 26.7% decline in segment operating income to $22 million in the region, on 1.2% higher sales of $1.3 billion.

Asia Pacific results depicted continued growth in volume and segment operating income, driven by China.

“Strong volume and continued benefits from price/mix versus raw material and other cost increases drove operating margin to 8.6% in the quarter,” said Goodyear.

This, it added, is “the highest level” of margins since before the 2019 pandemic.

While sales were down marginally, operating income grew by over 5% to $56 million, Goodyear added.