Goodyear's 3Q Results Are Solid, Says Kramer
Goodyear Tire & Rubber Co. posted net income of $317 million on net sales of $3.8 billion for the third quarter ended Sept. 30, 2016. That compares to income of $271 million on sales of $4.2 billion for the same period last year.
The company's income-to-sales ratio was 8.3%.
Segment operating income was down 7.6%, from $602 million to $556 million. Goodyear says operating income and sales were negatively impacted by the deconsolidation of Venezuela.
"We delivered solid results in the quarter, with a total segment operating margin of 14.5%, which takes our core segment operating income to record levels on a year-to-date basis," says Richard Kramer, chairman, chief executive officer and president.
Tire unit volumes totaled 42 million, which Goodyear says was essentially flat with 2015 after adjusting for the deconsolidation of Venezuela at the end of 2015.
* Replacement tire shipments were up 1%.
* Original equipment unit volume was down 6%.
Growth in the Asia Pacific segment was more than offset by declines in the Americas segment and Europe, Middle East and Africa segment.
For the first nine months of 2016, Goodyear recorded net income of $703 million on net sales of $11.4 billion. That compares to income of $687 million on sales of nearly $12.4 billion for the same period in 2015.
The income-to-sales ratio was 6.1%. Segment operating income was $1.5 billion, down 2% from the first nine months of 2015.
Tire unit volumes totaled 125 million vs. 124.1 million in 2015. Goodyear says the 0.7% increase was "driven by growth in the Asia Pacific region, primarily in Japan, due to the acquisition of a controlling interest in Nippon Goodyear Ltd., and China."
Replacement tire shipments were up 2%. Original equipment unit volume was down 3%.
Goodyear has revised its 2016 financial targets. The company now expects its full-year 2016 total segment operating income to be between $2 billion and $2.025 billion.
"Our revised 2016 outlook reflects recent volatility impacting our U.S. commercial truck tire business," says Kramer. "This near-term headwind will not have an impact on our value proposition or our ability to execute on our long-term plan.
"Our strategy is built to take advantage of the trends shaping our industry. Global demand for high-value-added, large rim-diameter tires is increasing. We are confident that our portfolio of these products and our distribution advantages position us on a path to sustained growth and achievement of the 2020 targets that we recently announced.
Consistent with this strategy, on Oct. 24 the company announced its intention to close its Philippsburg, Germany,tire manufacturing facility and realign its European capacity to increase production of high-value-added tires. “Our focus is on winning in the high-value segments of the market and reducing our exposure to low-growth and declining segments to capture the value of our brand and help our customers grow profitably," adds Kramer.
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