Suppliers

Goodyear: Sales Were Down, Income Up in 2016

Posted on February 8, 2017

Sales at Goodyear Tire & Rubber Co. were down 8% in 2016, $15.2 billion compared to $16.4 billion in 2015. The company says overall tire unit volumes were basically unchanged, though replacement tire shipments were up 2% and original equipment volume was down 4%.

The company reported net income of $1.3 billion, up from $307 million a year ago. Goodyear's income-to-sales ratio in 2016 was 8.3%.

Rich Kramer, pictured at Goodyear's recent customer conference, says the consumer business in the Americas and Asia Pacific regions drove the company's good 2016 results.
Rich Kramer, pictured at Goodyear's recent customer conference, says the consumer business in the Americas and Asia Pacific regions drove the company's good 2016 results.
Goodyear pointed to its deconsolildation of Venezuela as a lingering affect on its figures. The drop in overall sales figures primarily reflected the deconsolidation, as well as "unfavorable foreign currency translation." Referring to tire unit volumes, excluding the impact of Venezuela, unit volumes increased 1%.

The company's increase in net income was driven by a charge in 2015 to deconsolidate Venezuela, and a decrease in 2016 income tax expense due to the release of foreign tax valuation allowances.

The company reported 2016 segment operating income of $2 billion, down 2% from a year ago. That too was more than explained by the deconsolidation of Venezuela. Core segment operating income, which excludes Venezuela, was $1.9 billion in 2015.

“We delivered solid net income and record core segment operating income in 2016, driven by strong performance in our Americas and Asia Pacific consumer tire businesses,” said Richard Kramer, chairman and CEO. “Our results demonstrate continued sustainable earnings growth and disciplined execution of our strategy.

“While we expect raw material inflation to be a significant headwind in 2017, the combination of Goodyear’s innovation leadership, award-winning products and strong global brand creates an industry-leading value proposition and competitive advantage. We’ve demonstrated that we have been able to successfully offset raw material inflation over time.

“We remain confident in our strategy of capturing profitable growth in key segments of the market and in delivering our 2020 targets.”

Fourth quarter results

Goodyear’s fourth quarter 2016 sales were $3.7 billion, down from $4.1 billion a year ago, with the decrease driven by the deconsolidation of the company’s subsidiary in Venezuela.

Tire unit volumes totaled 41.1 million, down 2% from 2015. Replacement tire shipments were down 1%. Original equipment unit volume was down 7%, driven in part due to weakness in the U.S. commercial truck market.

Goodyear’s fourth quarter 2016 net income was $561 million, compared to a net loss of $380 million  in the year-ago quarter. The prior year was negatively impacted by a charge to deconsolidate Venezuela.

The company reported fourth quarter segment operating income of $479 million in 2016, compared to $480 million a year ago. Segment operating income in 2016 benefited from net cost savings, which was more than offset by lower price/mix net of raw material costs, lower volume and the deconsolidation of Venezuela. Core segment operating income, which excludes Venezuela, was $458 million in the year-ago quarter.

The Americas

  4Q 2016 4Q 2015 2016 2015
Tire units 18.7 19.6 74.1 79.1
Sales $2,.061 $2,313 $8,172 $9,370
Segment operating income 295 284 1,151 1,266
Segment operating margin 14.3% 12.3% 14.1% 13.5%

(in millions)

The Americas’ fourth quarter 2016 sales decreased 11% from last year to $2.1 billion. Sales reflect a 5% decrease in tire unit volume and the deconsolidation of Venezuela. Replacement tire shipments were down 3%. Original equipment unit volume was down 12%. Excluding the impact of the deconsolidation of Venezuela, unit volume decreased 3%.

Fourth quarter 2016 segment operating income of $295 million was up 4% from the prior year and a record. The increase was driven by strong performance in the consumer tire business, which was partially offset by weakness in the commercial truck tire business and the deconsolidation of Venezuela. Cost reduction actions and strong price/mix net of raw material costs were partially offset by the impacts of lower volume.

The deconsolidation of Venezuela negatively impacted fourth quarter volumes by 0.3 million units, sales by $167 million and segment operating income by $22 million.

Financial Targets

As a result of the continued escalation of raw material costs and the timing of the corresponding contractual adjustments to pricing with certain of its customers, the company expects flat year-over-year segment operating income in 2017 compared to 2016.

The company has confirmed its 2020 financial targets and capital allocation plan, which were announced on Sept. 15, 2016.

Shareholder Return Program

The company paid a quarterly dividend of 10 cents per share of common stock on Dec. 1, 2016. The Board of Directors has declared a quarterly dividend of 10 cents per share payable March 1, 2017, to shareholders of record on Feb. 1, 2017.

As a part of its previously announced $1.1 billion share repurchase program, the company repurchased 9.8 million shares of its common stock for $300 million during 2016’s fourth quarter. For the full year, the company repurchased 16.7 million shares for $500 million.

Since 2014, purchases under the program total 31.2 million shares for $913 million.

On Feb. 2, 2017, the board of directors authorized a $1.0 billion increase in the share repurchase program, bringing the total authorization to $2.1 billion.

Related Topics: Goodyear, Goodyear Financials, Rich Kramer

Comments ( 0 )
More Stories
Video Cemb Brings Fast, Touchless Wheel Alignment to North America

Cemb-USA/BL Systems Inc. is highlighting the 5-second, touchless wheel alignment system. Installation of the first system in North America is underway.

News Bridgestone Creates Partnership to Focus on Natural Rubber Source

Bridgestone Americas Inc. is partnering with a chemical company to develop a path toward the commercialization of guayle in the agricultural, sustainable rubber and renewable chemical sectors.  

The new G-Max RS is the General brand's first UHP summer tire. The company says its Smart Technologies offer impressive performance in dry and wet conditions while visual alerts provide driving confidence.
Product New G-Max RS UHP Summer Tire Rounds Out General Line

The new G-Max RS is the first General brand tire designed for the ultra-high performance summer tire segment.

Be the First to Know

Get the latest news and most popular articles from MTD delivered straight to your inbox. Stay on top of the tire industry and don't miss a thing!