Akron, Ohio — Goodyear reported double-digit drops in operating income and net losses for the quarter and fiscal year ended 31 Dec 2019, due to higher operating costs, one-time restructuring charges and tax "adjustments."
Sales revenue was off for both periods as well, dropping 4.2% in the quarter to $3.71 billion (€3.4 billion) and 4.7% for the full year to $14.7 billion.
Looking ahead, Goodyear President and CEO Richard Kramer acknowledged the company "continues to face a challenging global environment, including recessionary demand trends in many international markets.
To address these challenges, Kramer said, Goodyear remain focused on further improving cost structure and working capital management, while continuing to build capabilities to enable mobility.
Segment operating income fell 21.2% in the quarter to $242 million and 25.8% in the fiscal year to $945 million, Goodyear reported.
The net loss in the quarter was $392 million, versus net income of $108 million in 2018. The fiscal year net loss was $311 million, versus income of $693 in 2018.
Goodyear cited the combined effects of higher raw material costs, lower sales volume, unfavourable foreign currency translation (partially offset by improved price/mix), lower factory utilisations rates and a decrease in favourable indirect tax settlements in Brazil, for the earnings declines.
Goodyear also cited "discrete tax adjustments" of $386 million and rationalisation charges of $205 million as contributing to the net loss.
These adjustments primarily related to plans to modernise two tire plants in Germany and curtail production of tires for declining, less profitable segments of the tire market at the Gadsden, Alabama, factory.
The company reported lower operating earnings and sales in the Americas business unit, driven in part by significantly lower original equipment business.
"In the US, market conditions remained largely stable and our consumer and commercial replacement businesses delivered strong performances this year," Kramer said.
Operating income for the Americas segment fell 15.1% in the quarter to $152 million on 4.2% lower sales revenue of $2.03 billion.
For the full year, operating income dropped 15.9% to $550 million on 3% lower revenue of $7.92 billion.
Unit volume was off 2.1% in the quarter to 18.7 million tires and 0.7% for the year to 70.4 million tires.
Elsewhere, Goodyear delivered "solid consumer replacement growth" in China and Brazil during the second half of the year, Kramer added.
The company reported lower operating income and sale in both the Europe/Middle East/Africa and Asia/Pacific business units.
Goodyear did not issue sales or earnings forecasts for 2020.
The firm's stock price tumbled more than 10% to $11.78 per share hours after earnings were released early on 11 Feb.
The company is dealing with adverse conditions in the auto market, which has seen vehicle sales drop over the past four years and is bracing for further declines this year.
Changes in consumer behaviour and regional economic conditions have been blamed for much of the slowdown, and the coronavirus in China is expected to make 2020 particularly challenging for the sector.
As auto sales have slumped in recent years, so has Goodyear's stock price, falling to less than $12 per share in recent days from $36 per share in early 2017.