U.S. Consumer Replacement Tire Sales Help Goodyear in 2Q
"Our U.S. consumer replacement and commercial businesses continued to perform well in a challenging environment, aided by recent product launches,” said Richard Kramer following Goodyear Tire & Rubber Co.'s second-quarter 2019 results.
“We have continued our focus on strengthening our business by investing in premium supply and enhancing our OE pipeline and cost competitiveness."
Kramer, Goodyear's chairman, chief executive officer and president, added he was encouraged that several of the external factors impacting company business in recent quarters "are beginning to moderate, positioning us to deliver stronger results going forward."
Goodyear posted net income of $54 million on net sales of $3.6 billion for the second quarter ended June 30, 2019. That compares to income of $157 million on sales of $3.8 billion for the same period in 2018.
The company's income-to-sales ratio was 1.5%
Segment operating income was down 32.4%, from $324 million to $219 million.The decrease reflects higher raw material costs, lower volume, and "weaker results from other tire-related businesses and adverse currency," said the company. The decrease would have been greater if not for "favorable price/mix, improved overhead absorption from higher Americas production in prior quarters, and net cost savings."
Tire unit volume was down 4.1%, from 39 million units to 37.4 million. Replacement tire shipments were down less than 1%, while original equipment shipments were down 11%, "reflecting lower global vehicle production and strategic fitment choices," said the company.
Year-to-date, Goodyear recorded a net loss of $7 million on net sales of $7.2 billion. That compares to income of $232 million on sales of more than $7.6 billion for 2Q 2018. Segment operating income was down 32.4%, while tire unit volume was down 3.3%.
The first half of 2019 included several significant items, most notably $107 million in rationalization charges, primarily related to Goodyear's previously announced plan to modernize two of its tire manufacturing facilities in Germany.
In the Americas Business Segment, second-quarter 2019 sales decreased 2% to $2 billion, "reflecting unfavorable foreign currency translation, lower third-party chemical sales and reduced volume, partially offset by improved price/mix." Operating income was down 13%.
Tire unit shipments were down 1.1%, although
* replacement tire shipments rose 1%, and
* U.S. consumer replacement volume increased 4%, "led by above-industry growth in the 17-inch-and-greater category."
OE unit volume was down 9%, "entirely attributable to a 12% decrease in consumer OE due to lower vehicle production and strategic fitment choices," said Goodyear.