Goodyear reports Q1 net loss on lower sales, income

Akron, Ohio – Goodyear has suffered a 32.4% drop in operating income for the first quarter of 2019, posting a $61 million (€54.5 million) net loss due to a number of extraordinary items.

Goodyear attributed the net loss largely to $93 million in charges it took related to plans to modernise tire plants in Fulda and Hanau, Germany.

Sales were off 6.1% to $3.6 billion, driven by unfavourable currency translation and lower international volume, partially offset by improvements in price/mix.

Unit volumes fell 2.6% to 38 million, Goodyear said 26 April.

Operating income fell to $190 million, or 5.3% of sales, on the negative effects of higher raw material costs, lower volume, foreign currency impact and weaker results from other tire-related businesses, Goodyear said.

The negatives partially were offset by favourable price/mix, improved overhead absorption and net cost savings.

In a conference call with analysts, neither Richard Kramer, chairman, CEO and president, nor Darren Wells, treasurer, provided any earning guidance for the full fiscal year.

Kramer did note that Goodyear "gained momentum" in the US during the quarter, based on market share growth in the consumer and commercial replacement businesses.

In the company's 10-Q filing with the Securities and Exchange Commission, Goodyear said it expects to continue to experience "challenging" global industry conditions.

These included higher raw material costs of roughly $300 million versus 2018, foreign currency headwinds and volatility in emerging markets, throughout 2019.

On the plus side, Goodyear said it expects to see benefits from the ramp-up of its Mexican tire plant and of the TireHub distribution joint venture with Bridgestone Americas.

Moreover, the company expects make gains through its pricing actions implemented in 2018 and sales of higher value-added consumer replacement tires.