Goodyear Says Results Are Outstanding Despite 4Q Loss

Feb. 9, 2016

Goodyear Tire & Rubber Co. posted net income of nearly $307 million on net sales of $16.4 billion for fiscal 2015 ended Dec. 30, 2015. That compares to income of $2.4 billion on sales of $18.1 billion for fiscal 2014.

Segment operating income increased 18%, from $1.7 billion to $2 billion. The company's net income-to-sales ratio was 1.8%.

"I’m extremely pleased with our outstanding results as we delivered 18% growth in full-year segment operating income, exceeding $2 billion for the first time in our 117-year history,” says Richard Kramer, chairman and CEO. “Our success has enabled us to execute on all facets of our capital allocation plan, delivering long-term shareholder value."

On a general accepted accounting principles basis, Goodyear’s 2015 adjusted net income, excluding certain significant items, most notably the deconsolidation of the company's Venezuelan subsidiary, was $906 million. (The deconsolidation also affected fourth-quarter results.) Full-year 2015 adjusted net income was also impacted by $165 million of U.S. tax expense following the release of the company’s U.S. tax valuation allowance.

Tire unit volumes totaled 166.2 million, up 3% from 2014, due in part to the acquisition of Nippon Goodyear Ltd. in Japan. Replacement tire shipments were up 2%. Original equipment unit volume was up 3%.

Fourth-quarter results

Goodyear recorded a net loss of $380 million on net sales of $4.1 billion for its fourth quarter ended Dec. 30, 2015. That compares to sales of $4.4 billion in 4Q 2014. Goodyear says sales were impacted by $339 million in unfavorable foreign currency translation.

Fourth-quarter segment operating income was $476 million, up nearly 33% from the previous year. Goodyear says the increase was driven by favorable price/mix net of raw materials and higher volume, partially offset by cost inflation and unfavorable foreign currency translation.

Tire unit volumes totaled 42.1 million, up 7% from 2014. Replacement tire shipments were up 9%, while OE unit volume was up 2%.

"Fourth-quarter earnings grew 16% in our North America business and 20% in Asia Pacific, both records," says Kramer. "Earnings in Europe, Middle East and Africa recovered in the quarter despite a challenging environment.

"Our record results reflect strong demand for our high-value-added Goodyear-brand tires and our focus on capturing the value of these products in the marketplace.”

Shareholder return

Goodyear's board of directors has declared a quarterly dividend of 7 cents per share payable March 1, 2016, to shareholders of record on Feb. 1, 2016. The company paid a quarterly dividend of 7 cents per share of common stock on Dec. 1, 2015.

As a part of its previously announced $450 million share repurchase program, the company repurchased 3 million shares of its common stock for $100 million during the fourth quarter.

On Feb. 4, 2016, the company’s board of directors authorized a $650 million increase in the share repurchase program, bringing the total to $1.1 billion.

Goodyear says its record performance has resulted in "significant stock price appreciation during the three-year period ended Dec. 31, 2015." The company’s total shareholder return over this period totaled nearly 175%.