Suppliers

Goodyear Records $399 Million Profit Loss in 4Q 2019

Posted on February 11, 2020

The final months of 2019 delivered a painful blow to Goodyear Tire & Rubber Co., as the tiremaker recorded a net loss of $399 million in the fourth quarter, and a loss of $297 million for the full year.

Here’s how the company explained the loss:

“The decrease was driven by discrete tax adjustments of $380 million during the fourth quarter of 2019, including a non-cash charge of $334 million related to an acceleration of royalty income in the U.S. from the sale of the next twelve years of European royalty payments to our Luxembourg business, and rationalization charges of $77 million.”

Goodyear broke down the quarter with lists of positives and negatives:

Positives:

  • Positive trend in price versus raw materials
  • Strong cash flow generation
  • U.S. consumer replacement business continues to perform well
  • Global commercial truck tire shipments outpace the industry
  • Replacement shipments in Brazil are up double digits
  • Solid consumer replacement growth in China
  • OE fitments outperform the industry

Negatives:

  • Weak global light vehicle production
  • Acceleration in downturn of commercial truck
  • Recessionary demand in European consumer replacement industry
  • Distribution challenges in Europe
  • Competitive pressures for OE in China
  • Weak demand for off-the-road tires
  • Strong U.S. dollar vs transactional foreign exchange

Rich Kramer, chairman, CEO and president of Goodyear, told analysts plainly he was not pleased with the results, particularly with those recorded in the company’s European, Middle Eastern and African business unit.

“We continue to face a challenging global environment, including recessionary demand trends in many international markets. To address these challenges, we remain focused on further improving our cost structure and working capital management, while continuing to build our capabilities to enable mobility, today and in the future.”

Here’s a look at the numbers for the fourth quarter and full year of 2019:

4Q 20194Q 201820192018
Net sales$3.713 billion$3.876 billion$14.745 billion$15.475 billion
Net income-$399 million$110 million-$297 million$708 million

Tire units

Globally, tire units were down 2% for the final quarter of 2019, with 39.6 million units sold compared to 40.7 million in the final three months of last year. Goodyear says original equipment unit volume dropped 10%, driven by lower global vehicle production.

The bright side: Replacement tire shipments increased “slightly” in the fourth quarter.

For the full year, OE units decreased 8%. Replacement tire units were basically flat.

A regional look

In each of Goodyear’s three business regions, the results were down for the year. The only exception was in Asia Pacific, where the fourth quarter results were essentially flat.

Here’s a closer look at the Americas segment:

4Q 20194Q 201820192018
Tire Units18.7 million19.1 million70.4 million70.9 million
Net Sales$2.026 billion$2.114 billion$7.922 billion$8.168 billion
Segment Operating Income152179550654
Segment Operating Margin7.5%8.5%6.9%8.0%

Sales in the Americas dropped 4% in the fourth quarter, and tire unit volume fell 2%. Replacement tire shipments increased 2%, led by growth in the U.S. and Brazil.

OE unit volume fell 18%, which reflects the affect of the General Motors strike in the fall. Goodyear says the drop was “driven by our U.S. business, reflecting lower vehicle production, including the impact of a strike at a major OE customer, and strategic fitment choices.”

Kramer said, “In the U.S., market conditions remained largely stable and our consumer and commercial replacement businesses delivered strong performances this year, as they benefited from the strength of our brand, new product introductions, and the steps we have taken to align our distribution.”

EMEA

4Q 20194Q 201820192018
Tire Units13.0 million13.7 million55.1 million57.8 million
Net Sales$1.141 billion$1.210 billion$4,708 billion$5.090 billion
Segment Operating Income3874202363
Segment Operating Margin3.3%6.1%4.3%7.1%

EMEA sales fell 6% in the fourth quarter, which Goodyear attributed to lower volume and unfavorable foreign currency translation, though that was partially offset by improved price/mix. Overall tire unit volume dropped 4%, driven particularly by weakened demand for winter tires. OE units were down 12%.

Less volume and higher conversion costs resulted in a 49% drop in segment operating income for the final quarter of 2019.

Asia Pacific

4Q 20194Q 201820192018
Tire Units7.9 million7.9 million29.8 million30.5 million
Net Sales$546 million$552 million$2.115 billion$2.217 billion
Segment Operating Income5254193257
Segment Operating Margin9.5%9.8%9.1%11.6%

In the Asia Pacific region, sales fell 1%, even though overall tire unit volume was unchanged. OE units were up 4% — driven by growth in China — while replacement tire shipments were down 3% in the region.

The drop in segment operating income was driven by "higher selling, administrative and general expenses, and lower price/mix," Goodyear says.

Related Topics: Goodyear, Goodyear financials

Comments ( 2 )
  • R.J.

     | about 6 days ago

    Well, there you go - they close a plant and buy another company, while launching yet another add campaign that isn't likely to be successful, all the while the ignoring that their ship is, and has been, taking on water for a long time. What elements will they sell off THIS time to stay afloat?

  • See all comments
More Stories
News TBC Takes Sumitomo Brand to TMC

TBC Brands LLC is exhibiting at the American Trucking Association’s 2020 Technology & Maintenance Council (TMC) Annual Meeting & Transportation Technology Exhibition.

News CMA Adds U.S. Warehouse Space for 200,000+ More Double Coin Truck Tires

China Manufacturers Alliance LLC (CMA) has opened two new warehouses in California to bulk up its inventory of Double Coin tires. The new space adds about 225,000 units — most of which are Double Coin truck tires.

Any election year brings with it a bit of uncertainty, says Bruce Besancon. "I do believe there is a little concern in the marketplace as to which way certain policies will go and what’s going to happen with tariffs (and) our relationship with China."
News MTD Exclusive: What's in Store for OTR Tire Dealers in 2020?

The 65th edition of the Tire Industry Association OTR Tire Conference kicks off today. MTD recently caught up with OTR tire manufacturer representatives who participated in the panel discussion during last year’s OTR Tire Conference to get their take on what 2020 has in store.

News Hankook's 2019 Operating Income Drops By Double Digits

Sales revenue rose slightly as Hankook Tire & Technology Ltd.’s operating income fell 22.7.% to 5.4 billion won in 2019 compared to 7.0 billion won in 2018.

News Michelin Will Raise PLT Tire Prices

Michelin North America Inc. will increase the price of passenger and light truck tires under the Michelin, BFGoodrich and Uniroyal brands.

News Tire Profiles Unveils Interactive Software

Tire Profiles’ (TPI) new TraXtion software gives tire dealers the ability “to manage and act upon” data generated by the company’s TreadSpec drive-over reader.

News Pietro Berardi Will Lead Pirelli in North America

Pirelli & Cie SpA has named Pietro Berardi the new CEO for the North America region, effective March 1, 2020.

News Goodyear Unveils New Brand Campaign

Goodyear Tire & Rubber Co. says its new  brand campaign “underscores its more than 120-year commitment to the discovery, growth and possibility that is fueled by mobility.”

The Terra Trac AT II now bears the three-peak mountain snowflake symbol. The tire is available in 59 sizes for 15- to 20-inch wheels.
Product Terra Trac AT II Earns Three-Peak Mountain Snowflake

The Terra Trac AT II from Hercules Tire & Rubber Co.has earned the three-peak mountain snowflake rating.

News Hotwire Will Return After Presidents Day

Due to Monday's Presidents Day holiday, Modern Tire Dealer will not publish the Hotwire newsletter.  

Stertil-Koni says the inground scissor EcoLift is ideal for retrofit and existing workshop. It is relocatable.
Product Stertil-Koni EcoLift Has Ultra-Shallow Design

The inground scissor EcoLift from Stertil-Koni USA is designed to provide universal access to all subcomponents including brakes and wheels.

Nucap Industries says NRS Brakes won't fail as a result of corrosion and are a longer lasting and quieter brake pad.
Product NRS Brakes Coverage Expands to Classes 4-6 Trucks

Nucap Industries has expanded its NRS Brakes re-engineered galvanized brake pad coverage for various light- and medium-duty Hino trucks.

Be the First to Know

Get the latest news and most popular articles from MTD delivered straight to your inbox. Stay on top of the tire industry and don't miss a thing!

We respect your data and privacy.
By clicking the submit button below, you are agreeing with Bobit Business Media’s Privacy Policy and this outlined level of consent.