Goodyear first-quarter results hit by weak tire demand, rising costs

Akron, Ohio — Goodyear Tire & Rubber Co. has reported a first-quarter net loss as weak OE and replacement tire demand weighed on volumes across most key regions.

For the three months ended 31 March, Goodyear posted an 8.7% year-on-year decline in sales to $3.9 billion (€3.3 billion), on 11.6% lower volumes of 34.0 million units.

The US tire maker reported a net loss of $249 million for the period, compared to net income of $115 million in the previous year, according to results released 6 May.

Segment operating income (SOI) fell 51.3% year-on-year to $95 million, with the figure including a $46 million benefit related to a tariff adjustment following a recent US Supreme Court ruling.

Excluding the effects of the sale of its chemical business and the Dunlop brand, SOI declined by $63 million, Goodyear said.

Goodyear said the decrease reflected “higher inflation and other costs” of $163 million and the impact of lower volume of $159 million.

These were partly offset by “Goodyear Forward benefits” of $107 million, favourable price/mix versus raw materials of $103 million and the tariff adjustment.

Commenting on the results, CEO Mark Stewart described the quarter as “a challenging environment, marked by weak consumer industry demand in both OE and replacement across the majority of our key geographies.”

Despite the weak backdrop, Stewart said results were “in line with our expectations.”

Looking ahead, the executive warned that “increased pressure on industry demand and higher raw material costs stemming from the conflict in the Middle East.”

These, he said, would require Goodyear to continue taking “meaningful actions to strengthen our cost structure.”

"We have consistently demonstrated a strong capability in driving cost transformation. We expect to deliver further savings to position the company for long term value creation," he added.

In the Americas region, first-quarter sales dropped 17.5% year-on-year to $2.1 billion, while tire volumes fell 17.0% year-on-year to 15.3 million units. The region’s SOI fell by more than 76% to $37 million.

Replacement volumes declined 23.2%, driven by “weak industry conditions in North America,” lower sell-in volumes, “increased competitive promotional activity” and the “planned rationalisation of lower-tier product offerings.”

OE volumes rose 8.2%, which Goodyear attributed to “strong consumer market share gains.”

In EMEA, first quarter sales increased 6.7% year-on-year to $1.4 billion, supported by currency and price/mix, despite lower volumes and the impact of the Dunlop brand divestment.

SOI for the region improved to $1 million from a loss of $5 million in the prior-year quarter.

Replacement volumes in the region declined 15.2%, reflecting “market weakness in the EU, increased competition and the planned rationalisation of lower-tier product offerings.”

OE volumes increased 8.1%, again supported by market share gains.

Asia Pacific delivered the strongest profitability performance among the regions.

Sales declined 4.0% to $455 million as volumes fell 3.8%, driven by “weak OE industry demand in China.”

However, SOI increased 26.7% year-on-year to $57 million, supported by favourable price/mix and savings from the Goodyear Forward restructuring programme.