Goodyear Tire & Rubber Co. suffered decreases in net income, net sales, operating income and tire unit volume in the second quarter of 2017 compared to the second quarter of 2016.
Goodyear posted net income of $147 million on net sales of nearly $3.7 billion for the second quarter ended June 30, 2017. That compares to income of $202 million on sales of more than $3.8 billion for the same period last year.
The company's income-to-sales ratio was 4% for 2Q 2017, down from 5.2% in 2Q '16. Goodyear says the 5% decrease in net sales was "largely attributable to lower tire unit volume, partially offset by improved price/mix."
Segment operating income was down 32%, from $531 million to $361 million. It was also down in all three of Goodyear's business units.
“Our second quarter results reflect the impact of volatile raw material costs and an increasingly challenging competitive environment, particularly in the United States and Europe,” says Richard Kramer, chairman, CEO and president. “In addition to higher raw material costs, we have seen a weakening in OE and consumer replacement demand across many of our key markets during the first half, despite strong underlying industry fundamentals.
"The combination of these factors has led to a highly unusual first-half environment, particularly given the favorable trends in miles driven, gasoline prices and unemployment that are generally supportive of our industry.
“In light of the challenging global marketplace in the first half of 2017, we have lowered our segment operating income expectations for the remainder of the year,” says Kramer. “Despite the near-term challenges, I am no less optimistic about our ability to drive our strategic priorities against the favorable industry megatrends.”
Global tire unit volumes totaled 37.4 million, down 10% from 2016, broken out as follows:
Replacement: down 11%.
Original equipment: down 8%.
Unit sales were down 9% in the Americas Business Unit and 15.5% in the Europe, Middle East and Africa. They remained unchanged in the Asia Pacific Business Unit.
In the Americas, replacement tire shipments were down 8%. Goodyear says the drop was mainly due to lower volumes in 16-inch-and-below rim diameter tires in the U.S., which were the result of increased competition. OE unit volume was down 12%, driven by lower auto production.
For the first six months of 2017, Goodyear recorded net income of $313 million on net sales of nearly $7.4 billion. That compares to income of $386 million on sales of more than $7.5 billion for the first half of fiscal 2016. Operating income was down 21.4%, from $950 million to $746 million.
Tire unit volumes were down 6.7%, from 83 million to 77.4 million. Replacement tire shipments were down 6%, which Goodyear says was a reflection of increased competition. OE unit volume was down 8%, driven by lower auto production.