Goodyear posts 'solid' 2016 earnings

Akron, Ohio – Buoyed by strong performances in its Americas and Asia Pacific consumer tire operations, Goodyear posted $479 million (€447 million) in fourth quarter segment operating earnings and $2 billion in operating income for the year ended 31 Dec.

Sales for the year declined 7.8% to $15.2 billion and fell 7.9% to $3.7 billion in the quarter, reflecting primarily the deconsolidation of the company's subsidiary in Venezuela as well as unfavourable currency translation, the Akron-based tire maker said.

"We delivered solid net income and record core segment operation income in 2016, driven by strong performance in our Americas and Asia Pacific consumer tire businesses," Richard Kramer, Goodyear chairman, CEO and president said. "Our results demonstrate continued sustainable earnings growth and disciplined execution of our strategy."

Net income rose to $1.26 billion for the year and to $561 million for the quarter, reversing a fourth quarter 2015 loss.

For 2017, Kramer said Goodyear expects raw material inflation to be significant, but that the company has demonstrated through its innovation, award-winning products and strong global brand the ability to offset raw material inflation over time.

In 2016 Goodyear's tire unit volumes totalled 166.1 million, essentially unchanged from 2015. Of these, replacement shipments grew 2% and original equipment unit volume declined 4%.

Excluding the impact of the deconsolidation of the operations in Venezuela, unit volumes increased 1%, the company said.

Goodyear said the nearly fourfold increase in full-year net income was driven by a charge in 2015 to deconsolidate the Venezuela unit and by a decrease in 2016 income tax expense due to the release of foreign tax valuation allowances. Full-year adjusted net income was $1.1 billion, up from $906 million in 2015, the company said.

For the fourth quarter, Goodyear said tire volumes fell 2% to 41.1 million units, with replacement shipments sliding 1% and OE shipments 7%, due in part due to weakness in the commercial truck market.

In the Americas, Goodyear said sales fell 11 percent in the quarter to $2.06 billion, reflecting a 5% decline in tire unit volume to 18.7 million units, also in part due to the deconsolidation in Venezuela. Replacement tire shipments fell 3% and OE shipments slid 11%.

Fourth quarter segment operating income in the Americas increased 3.9% to $295 million as sales declined 0.9% to $2.06 billion.

For the year, segment operating income declined 9% to $1.15 billion as sales slid 12.8% to $8.2 billion.

For both the quarter and year, Americas segment operating margins improved—to 14.3% (from 12.3%) and 14.1% (from 13.5%), respectively.

In the Asia Pacific region, segment operating income improved 7.2% in the fourth quarter to $103 million, and nearly 17% for the year to $373 million.

Fourth quarter sales for the region declined 2% to $548 million, but increased 7.5% for the year to $2.1 billion.