Goodyear more than doubles operating income amid ongoing rationalisation

Akron, Ohio – Goodyear Tire & Rubber Co. has more than doubled segment operating income for the first half of the year, marking significant progress in its ongoing Goodyear Forward rationalisation plan.

For the first half of the year, segment operating income came in at $586 million (€541 million), up by $337 million from a year ago, Goodyear reported 31 July.

Sales for the first six months of the year, however, fell 7.5% to $9.1 billion with tire unit volumes totalling 80.5 million, the Akron-based tire maker announced.

Goodyear linked the increase in segment operating to the $227 million positive effect from price/mix versus raw materials and a $162 million effect from the Goodyear Forward transformation plan.

Furthermore, the tire maker secured $52 million from insurance claim recoveries during the period.

The gains were partially offset by lower tire volume of $69 million, a $58 million headwind from higher inflationary costs, and unfavourable fixed overhead absorption of $33 million.

Goodyear said it particularly delivered strong improvements in segment operating income in the second quarter, despite lower sales.

The US group reported segment operating income of $339 million in the three months to end of June, up $215 million from a year ago.

Sales, during the period, fell 1.3% to $4.6 billion with tire unit volumes totalling 40.1 million.

The group showed “clear progress” on its Goodyear Forward plan, achieving “significant margin expansion" and securing a deal to sell its off-the-road business, said CEO and president Mark Stewart.

Stewart said he remained confident that the company would deliver 'Goodyear Forward' as well as a 10% segment operating income margin by the end of next year.

Unveiled in November last year, the ‘Goodyear Forward' plan aims to deliver “cost reduction” of $1 billion by the end of 2025. (ERJ report)

Breaking down regional performance for the second quarter, Goodyear reported an 8.2% decline in sales in Americas.

The fall, it said, was driven by lower replacement volumes and unfavourable price/mix due to continuing weakness in commercial truck and contractual price adjustments.

During the quarter, volumes decreased 5.9% year-on-year, reflecting an 8.6% decline in the replacement market.

Goodyear linked the replacement decline to the ‘significant growth’ of low-cost imports, a "transitory impact" from distribution changes in Latin America, and flooding in Brazil earlier in the quarter.

OE volumes, on the other hand, were up 6.7% compared to the second quarter of 2023.

Second quarter 2024 segment operating income in the region came in at $241 million, up $138 million from the prior year's quarter.

Similarly in Europe, Middle East and Africa (EMEA), Goodyear improved segment operating income significantly to $35 million, up from a loss of $19 million reported last year.

Sales in the region were down 4.6% year-on-year to $1.3 billion during the second quarter, driven by the negative impact of changes in foreign currency exchange rates.

Volumes decreased 0.9% year-on-year, reflecting flat demand for OE tires and a 1.4% decline in replacement tire market.

Volumes were particularly down in Eastern Europe, especially in Turkey, Goodyear noted.

In Asia Pacific, sales grew 1.2% to $594 million, while segment operating income rose 57% to $63 million.

Tire unit volume increased 7.8%, due mainly to a 32% increase in OE demand, driven by EV fitments in China.

Replacement tire unit volume decreased 8.9%, reflecting the impact of the group’s restructuring in Australia and industry softness in China.