Goodyear Reports Strongest 1Q Since 2018
Replacement consumer tire sales continue to drive Goodyear Tire & Rubber Co.'s recovery and rebound from COVID-19, with overall replacement tire volume increasing 14% in the first quarter, a number Goodyear says "significantly" exceeded the industry. The tiremaker recorded sales of $3.5 billion in the period, up 15% from a year ago, yet still shy of pre-pandemic results.
The $3.511 billion in sales in 2021 compares to 3.598 billion in 2019.
Goodyear recorded a profit in the first quarter of $12 million, compared to a loss of $619 million in 2020. The last time Goodyear recorded a profit for the first quarter of the year was in 2018.
“We delivered impressive segment operating income, which was significantly above first quarter 2020 results and also nearly 20% higher than first quarter 2019 despite sales volumes not yet having fully recovered to pre-COVID levels,” said Rich Kramer, Goodyear's chairman, CEO and president. “We achieved these results despite the impact of a severe winter storm in the U.S. and industry supply chain challenges during the quarter.
“Our consumer replacement business delivered outstanding results. By leveraging improved distribution and new products, we outperformed the industry while expanding margins. At the same time, we also continued to build our OE business, where we are benefiting from our leading technical capabilities and emerging mobility trends."
Total tire units were 35 million, up 12% from the previous year. In addition to the gains in the replacement business, Goodyear says its original equipment unit volume increased 5$, "driven by higher vehicle production in Asia Pacific and increased market share in EMEA."
The winter storm Kramer refers to was the late-spring snowstorm that affected the Gulf Coast in the U.S. It resulted in temporary retail store closures and affected production at the company's chemical plants. The storm resulted in a negative impact of $23 million.
In the big picture, Kramer told investors that it's "remarkable just how much has changed over the last year." He said the company sees "a much brighter picture" as the economy rebounds, vaccinations are increasing, vehicle miles traveled are increasing and employers are hiring.
"As markets are recovering we're feeling momentum we haven't felt in quite some time."
The expected acquisition of Cooper Tire & Rubber Co. — Goodyear closed its call with investors on April 30 just as Cooper shareholders were to begin their meeting and vote on the deal — will help fuel Goodyear's future, Kramer said.
"We're excited for this next chapter to begin."
Net sales in the Americas totaled $1.787 billion, up 7% from $1.673 billion a year ago. The improvement is a combination of better volumes, as well as improvements in price/mix. The region sold a million more tires in the period, 15.5 million units compared to 14.5 million tires in the first quarter of 2020.
Replacement tire volume increased by 11%, "reflecting stronger industry demand and U.S. consumer and commercial replacement market share gains," Goodyear says. OE volume dropped 6%, though the decline was partially offset by gains in Latin America.
Segment operating income was $114 million, compared to basically flat results a year ago. The winter storm affected segment operating income by about $17 million.
Sales in Europe, the Middle East and Africa increased 24% from the year-ago period, $1.231 billion compared to $995 million in the year-ago period. Overall tire unit volume grew 10%, with replacement tire volumes up 11%, with gains on both the consumer and commercial sides. OE volumes were up 6% with "significant share gains" from new consumer fitments and new fleet customers.
The Asia-Pacific region's sales increased 27%, to $493 million from $388 million a year ago. Tire unit volume increased 29%, to 6.8 million units compared to 5.2 million in 2020. Replacement tire volumes increased 31% — "reflecting a record first-quarter performance," Goodyear says. OE units were up 26% as vehicle production in China has rebounded.