Goodyear expects materials cost pressures to ease
Tire maker anticipates declining trend for raw materials costs in the second half of the year
Akron, Ohio – Goodyear Tire & Rubber Co. has introduced a 5% list price increase in the European consumer replacement tire segment in response to bolster profitability in the region.
Effective 1 Jan, the price hike is intended to enable Goodyear to ‘catch up’ with the increases in raw materials costs over the first two quarters of the year, said CFO Christiana Zamarro.
Goodyear expects to see a $200 million (€183 million) increase in raw materials costs during 2023.
For the first quarter, the tire maker expects a year-on-year increase of $300 million in raw material costs, followed by a $100-million increase in the second quarter.
Over the second half of the year, however, Goodyear anticipates a year-on-year decline of $200 million in these costs – from the high levels of the prior-year period.
The projections, Zamarro noted, includes "a very significant step" down in materials costs in the second half of the year.
“We anticipate price and product mix improvements to more than offset raw material cost increases in the first quarter of 2023 by approximately $100 million,” said Zamarro.
Goodyear's CFO, however, cautioned that prices for commodities such as natural rubber and synthetic rubber have been historically volatile.
“Our raw material costs could change based on future cost fluctuations and changes in foreign exchange rates,” she commented.
Meanwhile, Goodyear expects other inflationary cost pressures to persist, particularly with respect to transportation, labour and energy costs.
“We expect the negative impact from non-raw materials inflation in the first quarter of 2023 will be approximately $175 million compared with the first quarter of 2022,” said the Goodyear CFO.
As a result, Goodyear will continue to focus on actions to offset costs through rationalisation actions, further price actions and improvements in product-mix.