Goodyear earnings, sales fall amid lower tire volumes, high costs

Akron, Ohio – Goodyear has delivered weak results for 2023, with both sales and segment operating profit down compared to the year before.

The US tire & rubber group reported a ‘total segment operating income’ of $968 million (€904 million) for the year, down from $1.27 billion reported the year before.

Annual sales decreased 3.5% year-on-year to $20.0 billion, due mainly to lower volumes, primarily in Americas and Europe, Middle East and Africa (EMEA) regions, Goodyear announced 13 Feb.

Commenting on the results, Goodyear said the $308 million decrease in operating income was mainly due to “increased conversion costs of $599 million”.

The costs, Goodyear explained, were driven by the effects of lower tire production on fixed cost absorption, inflation and higher energy costs.

Furthermore, lower tire volume of $250 million, primarily in Americas and EMEA, a $55 million negative impact due to the Tupelo storm (ERJ report) and an increase of $30 million in admin costs impacted income.

The tire maker was also hit by a $23 million unfavourable foreign currency impact, due to the strengthening of the US dollar, and an $18 million negative impact of the Debica fire in Poland (ERJ report).

The decreases were partially offset by global improvements in price and product mix of $579 million, lower raw material costs of $67 million, and lower R&D costs of $25 million.

In terms of sales, Goodyear said lower volumes in Americas and EMEA were partially offset by higher tire volume in Asia Pacific.

However, unfavourable foreign currency translation, a decrease in sales in other tire-related businesses and retread sales in EMEA impacted revenue for the whole year.

On a positive note, global aviation tire sales and fleet solutions demand in EMEA grew over the year.

Goodyear also reported a net loss of $689 million, or $2.42 per share, compared to a net income of $202 million, or $0.71 per share, in 2022.

The change in Goodyear net income (loss) was primarily due to higher rationalisation charges, lower segment operating income, a non-cash goodwill impairment charge, higher interest expense and higher other expense.

During 2023, Goodyear said it reduced production at many of its facilities in order to “address softening industry demand and prevent the buildup of excess inventory”.

This resulted in a reduction of 14.2 million units compared to production in 2022, primarily in Americas and EMEA.

The results for 2023 also include a 6.1% decrease in tire unit shipments compared to 2022, primarily due to lower global replacement tire volume, partially offset by growth in OE, primarily in Asia Pacific and EMEA.

Elaborating on the market, Goodyear said the weakness it experienced in the replacement market during the first half of 2023 improved during the second half of the year.

Industry volumes also grew in several of Goodyear’s markets, including the US in the second half of the year.

“We saw continued improvement in demand from our OE customers throughout 2023, including growth in China,” the tire maker added.

The inflationary cost pressures of the first half also eased in the second six months of the year, as raw material and transportation costs decreased.

However, Goodyear said, cost pressures remain on wages and benefits.

The group said it continues to “experience increased labour-related costs and manufacturing inefficiencies associated with the ongoing tight labour supply, particularly in the US.”

Additionally, energy costs remain elevated in EMEA, driven by the indirect impacts of the war in Ukraine.