Skip to main content
Sister Publication Links
  • Rubber & Plastics News
Subscribe
  • My Account
  • LogIn
  • News
  • Technology Focus
    • Features
    • Technical Papers
    • Analysis: Rubber mixing plants of the future
      Analysis: US probes dumping by ESBR suppliers
      Opinion: Tire labels stuck in a rut
      Analysis: NR pricing takes one step forward, two steps back
    • Technical paper: Varying Si-substituents for rubber silanes
      White paper: Role of tire innerliners in improving 'in-use rolling resistance'
      White paper: Why tire air retention matters now more than ever
      Nippon Soda: Use of 1,2-polybutadiene in CSM rubber applications
  • Events
    • ERJ Events
    • ERJ Livestreams & Webinars
    • Industry Events
    • Journey to Automation Awards 2020
      Sustainability: Top 10 E4S projects table
  • Maps & Reports
  • People
  • Directory
  • Digital Edition
  • Brainiac
MENU
Breadcrumb
  1. Home
  2. News
May 02, 2017 12:00 AM

Weak demand, prices impact Goodyear's first quarter

Shahrzad Pourriahi
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    Akron, Ohio – The combined effects of price increase and weak demand impacted Goodyear's first quarter, which saw operating and net income fall on relatively unchanged sales.

    Goodyear's collective segment operating income fell 8.1% to $385 million, while net income fell 9.8% to $166 million.

    The decreases were driven by the impact of lower volume and unabsorbed overhead, partially offset by favourable price/mix net of raw materials costs and net cost-saving actions, Goodyear said.

    Goodyear's first quarter sales of $3.7 billion were slightly ahead of the year-ago period, largely due to improved price/mix and higher pricing of third-party chemical sales partially offset by lower tire unit volume, the company said.

    "These results are a great outcome given an environment of rising raw material costs and weaker demand," Richard Kramer, Goodyear chairman, CEO and president.

    "While raw-material inflation has moderated in recent weeks, we continue to expect a significant year-over-year headwind in 2017," he said. "We remain confident in our ability to offset raw-material cost inflation over time."

    Tire unit volumes fell 4% to 40 million, including an 8% drop in original equipment unit volume, primarily due to lower US auto production in the first quarter, according to Goodyear, noting the comparison with very strong volumes in the US and China OE market during the first quarter of 2016.

    Replacement tire shipments fell 2% during the quarter.

    "We expected a decline in unit volume in the first quarter which was driven by our planned exit of some of the smaller rim size tires," Kramer said.

    He admitted that unit demand was weaker than expected, especially in the replacement market and sell out in the first quarter was softer than anticipated.

    In Europe, Middle East and Africa, first quarter 2017 sales decreased 1% from last year to $1.2 billion, reflecting a 4% decrease in tire unit volume and unfavourable foreign currency translation, which was partially offset by improved price/mix. Replacement tire shipments were down 5%. Original equipment unit volume was down 1%.

    In the Americas business segment, operating income declined 17.7% to $214 million as sales edged up 0.4% to $1.96 billion. Tire sales slid 4.4% to 17.2 million units. Replacement tire shipments fell 2% while OE unit volume dropped 12%.

    "For the rest of the year we continue to expect softness in the US OE production, particularly in the second and third quarters," Kramer said.

    "We saw growth in the 17-inch and larger segment of the industry at 8%, which is driving continued mix-up in our business. Total industry sell-out during the quarter was softer than expected. We believe the weakness in sell-out is related to warmer weather trends in the Northeast and Midwest as well as a delay in tax refunds affecting the US consumer," he said.

    He said Goodyear expects moderate replacement industry growth in 2017 amid positive key economic indicators.

    He acknowledged that the round of tire price hikes, which Goodyear initiated in February with an 8% increase, had a negative effect on volume.

    RECOMMENDED FOR YOU
    Hexpol acquiring Spanish rubber compounder Unica
    Hexpol acquiring Spanish rubber compounder Unica
    Synthomer launches Asia innovation centre in Malaysia 
    Synthomer launches Asia innovation centre in Malaysia 
    Kuraray raising elastomer prices again
    Kuraray raising elastomer prices again
    Free Newsletters

    Breaking news and in-depth coverage of essential topics delivered straight to your inbox.

    Subscribe today

    Get the latest news impacting the European rubber industry, from breaking news to razor-sharp analysis, in print and online.

    Subscribe now
    Connect with Us
    • LinkedIn
    • Twitter
    • Youtube

    Logo
    Contact Us

    @ 2019 European Rubber Journal. 
    European Rubber Journal is published bi-monthly by NUERJ Ltd.

    Registered Office: Castle House, 89 High Street,
    Berkhamsted, Hertfordshire HP4 2DF, United Kingdom. 

    Tel. + 44 (0)203 196 0141 

    Registered No. 13104613 England

    Email: [email protected]

    Website www.european-rubber-journal.com

    Customer service 

    Tel. + 44 (0)203 196 0141 

     

    Resources
    • About us
    • Contact Us
    • Advertise with Us
    • Media Kit
    • Ad Choices Ad Choices
    • Sitemap
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 2021. NUERJ LTD. All Rights Reserved.
    • News
    • Technology Focus
      • Features
      • Technical Papers
    • Events
      • ERJ Events
      • ERJ Livestreams & Webinars
      • Industry Events
    • Maps & Reports
    • People
    • Directory
    • Digital Edition
    • Brainiac