Goodyear Posts Second-Quarter Results
Goodyear reports operating income of $605 million in the first half of 2018, down from $759 million a year ago.
“We delivered strong operating performance in the quarter highlighted by impressive volume growth in our mature markets where we regained share, particularly in the more profitable 17 inch and greater rim sizes in the U.S. and Europe,” said Richard J. Kramer, Chairman, Chief Executive Officer and President. “Additionally, we achieved our price/mix and net cost savings goals for the quarter.”
“While our execution in the period was robust, macro headwinds are intensifying – including rising raw material costs, a stronger U.S. dollar and softening market conditions in China. We are adjusting our plans accordingly to mitigate the impact of these challenges over the intermediate-term. I remain confident that our strengthening position in the marketplace, along with value created through our strategic initiatives, will allow us to deliver on our 2020 plan,” he added.
“Our new TireHub distribution joint venture in the U.S. is performing exceptionally well out of the gate, and our shipments to the wholesale channel are running ahead of our transition plans. Goodyear’s customer base has demonstrated its loyalty to our brand and I am confident that TireHub’s best-in-class service model, together with added supply from our new Americas plant, will enhance value for our retail and fleet customers,” said Kramer.
Goodyear’s second quarter 2018 sales were $3.8 billion, up four percent from a year ago, driven by higher volume and improved price/mix.
Tire unit volumes totaled 39.0 million, a four percent increase from 2017. Replacement tire shipments rose five percent, attributable to increased industry demand and share gains in EMEA. Original equipment unit volume was up three percent, primarily driven by consumer demand in Asia Pacific and global commercial shipments. Consumer replacement shipments in the U.S. outpaced industry growth after adjusting for the impact of the TireHub transition, driven by outperformance in the 17-inch-and-larger category.
Goodyear’s second quarter 2018 net income was $157 million (65 cents per share), up from $147 million (58 cents per share) a year ago. Second quarter 2018 adjusted net income was $150 million (62 cents per share), compared to $177 million (70 cents per share) in 2017. Per share amounts are diluted.
The company reported second quarter segment operating income of $324 million in 2018, down from $369 million a year ago. The decrease was driven by the impacts of higher raw material costs, general cost inflation, and lower price/mix, which were partially offset by the benefits from cost savings initiatives and increased sales volume.
Goodyear’s sales for the first six months of 2018 were $7.7 billion, a four percent increase from the 2017 period, primarily due to favorable foreign currency translation, improvements in price/mix and higher tire volume. These increases were partially offset by lower sales in other tire-related businesses.
Tire unit volumes totaled 78.0 million, up one percent from 2017, driven by stronger consumer replacement shipments in EMEA, as well as increased consumer OE demand in Asia Pacific and higher global commercial shipments. Replacement tire shipments increased by one percent. Original equipment volume was essentially flat.
Goodyear’s year-to-date net income of $232 million (96 cents per share) is down from $313 million ($1.23 per share) in the prior year’s period. The first half 2018 adjusted net income was $272 million ($1.12 per share), compared to $366 million ($1.44 per share) in the prior year’s period. Per share amounts are diluted.
The company reported first-half segment operating income of $605 million in 2018, down from $759 million a year ago. The decrease was attributable to the effect of higher raw material costs and reduced price/mix.