Goodyear earnings flat amid raw material woes, strong dollar

Akron, Ohio – US tire maker Goodyear Tire & Rubber Co. has reported flat earnings in the third quarter of 2022, due mainly to the negative impact of strong US dollar and the ongoing increase in the cost of raw materials.

The Akron-based group reported segment operating income of $373 million (€375 million) for the quarter, on a par with last year’s $372 million.

Net sales grew 7.6% year-on-year to $5.3 billion, driven by strong price/mix, said Goodyer in a statement 31 Oct.

During the quarter, Goodyear said its price/mix record of $742 million exceeded raw material costs by $204 million.

Efficiency expenses came in at $94 million, while calculated inflation (CPI) reached $145 million. Currency exchange rates had a negative impact of $9 million on earnings.

Tire unit volume in the quarter totalled 46.7 million, down 3% year-on-year, said Goodyear, adding that the strong dollar reduced sales by nearly 7%.

Meanwhile, non-recurrence of inventory step-up saved $70 million in terms of costs.

Goodyear’s net income fell 43% to $116 million during the quarter, reflecting reduced merger-adjusted operating income, higher interest expense and unfavourable currency exchange.

“Following strong earnings and revenue growth in the first half, third quarter results moderated, reflecting overall weaker industry volumes and increasing pressure from cost inflation,” said the tire maker.

Americas end-user demand remain solid, with sales up 11.5% year-on-year at $3.3 billion, and segment earnings increasing 18% to $306 million.

Overall volumes for the region fell by 1.8 million units, reflecting the ‘rebuild of deal inventory’ following the pandemic.

In Europe, volumes were weaker than anticipated, due mainly to “significantly weaker industry environment,” said Goodyear.

Unit volume fell by just under 1 million units – or 6.5% year-on-year – while OE units recovered by 0.7 million units.

Here, sales fell 2.8% to $1.3 million on lower volumes and a 22% impact of currency devaluation.

Segment operating income decreased 63% to $30 million, due to inflation costs, increases in wages and a significant impact of energy prices.

Asia Pacific returned to profit after four quarters of decline, reporting 15% year-on-year increase in earnings to $37 million.

Sales in the region grew by 14% to $650 million, reflecting higher volumes and strong price/mix.