Goodyear expects EMEA challenges to persist

Akron, Ohio – Goodyear Tire & Rubber expects its woes to continue in Europe, Middle East and Africa (EMEA), despite current restructuring efforts in the region.

The US tire maker has faced headwind in its sales volume performance, in both OE and replacement markets in the EMEA region since 2019.

In a 13 Feb earnings call, Goodyear finance chief Christina Zamarro said the group saw “little downside risk” to OE in its 2024 outlook.

However, in the consumer replacement segment in Europe, Zamarro said Goodyear had “lost a lot of market share since 2019 to imported budget brands”.

Such brands, the Goodyear executive said, have grown significantly since 2019, despite demand shrinking during the same period.

“So, we've lost our fair share of that [market] and that's why we're directing the restructuring dollars as part of Goodyear Forward to the factories in EMEA (ERJ report),” she added.

However, Zamarro expressed doubt if the current restructuring effort would be sufficient to stabilise Goodyear's business performance in EMEA.

“We're addressing the cost competitiveness with a couple of factories out,” she said, adding “I think there will be more work for us to do beyond 2025.”

“I think we can get Europe to a high single digit operating income margin performance. [But] I don't think we'll get there by the end of 2025,” she continued.

According to Zamarro, the two factory closures in Germany and a big SAG (selling, general and administrative) restructuring worth $100 million (€92 million), are the “beginning [of] the work.”

To achieve the target, the CFO said she expected EMEA to get “their fair share of” purchasing and corporate restructuring which will take place as part of the two-year Goodyear Forward plan, aimed to achieve $1 billion in cost-savings.

“We do have a good path to earnings growth in the future in Europe, but I think it's going to take a little bit longer than this two-year plan period,” she concluded.

Goodyear reported a slight recovery in its fourth quarter earnings in EMEA, posting an operating income came in at $6 million, up from a loss of $80 million reported the year before.

For the full year, EMEA sales droped to slightly to $5.6 billion, while segment operating income fell by more than 72% to $17 million.