Goodyear Reports 1Q Loss
Goodyear posted a net loss of $61 million on net sales of $3.6 billion for the first quarter ended March 31, 2019. That compares to income of $75 million on sales of $3.8 billion for the same period in fiscal 2018.
“We gained momentum in the U.S. during the quarter, as our consumer and commercial replacement businesses both grew share, while increasing the value we capture in the marketplace," said Richard Kramer, chairman, chief executive officer and president. "In addition, we took steps to increase our long-term competitiveness. The plans we announced to modernize our Hanau and Fulda manufacturing facilities in Germany will improve our supply of cost-effective premium tires in Europe, helping us achieve our goal of having the right tire, at the right place, at the right time, at the right cost."
(During the first quarter, Goodyear announced plans to invest approximately $122 million in its Hanau and Fulda, Germany, manufacturing facilities.)
Segment operating income was down 32%, from $281 million in the first quarter of 2018 to $190 million in 1Q 2019. Tire unit volumes were down 2.5%, from 39 million to 38 million.
Americas Business Segment
Tire units (no change): 16.7 million in 1Q 2018 and 2019.
Sales (down 2.7%): from $1.93 billion to $1.87 billion.
Segment operating income (down 30%): from $127 million to $89 million.
Segment operating margin: from 6.6% to 4.7%.
In the Americas Business Segment, first-quarter 2019 sales "reflect the negative effect of foreign currency translation and lower third-party chemical sales, partially offset by improved price/mix," said Goodyear. "Replacement tire shipments were up 3%, driven by an increase of 4% in overall consumer replacement.
"U.S. consumer replacement volume increased 6% over the prior year, led by above-average growth in the 17-inch-and-greater category. Original equipment unit volume was down 8%, attributable to a 10% decrease in consumer OE, driven in part by the impact of changes in OEM production."
Goodyear said the decrease in operating income in the Americas Business Segment "reflects higher raw material costs, reduced earnings from our other tire-related businesses and unfavorable foreign currency translation, partially offset by favorable price/mix and improved overhead absorption."
Goodyear's board of directors declared a quarterly dividend of 16 cents per share payable June 3, 2019, to shareholders of record on May 1, 2019. The payout represents an annual rate of 64 cents per share.
Goodyear also announced it had refinanced its European revolving credit facility in March, extending the maturity to 2024. As a result, the company
* increased the available commitments from 550 million euros to 800 million euros;
* decreased the interest rate margin by 25 basis points; and
* decreased the annual commitment fee by 5 basis points.
The board of directors has declared a quarterly dividend of 16 cents per share payable June 3, 2019, to shareholders of record on May 1, 2019. The payout represents an annual rate of 64 cents per share.