Goodyear Reports Second Quarter, First Half 2018 Results

Goodyear Reports Second Quarter, First Half 2018 Results

Goodyear Reports Second Quarter, First Half 2018 Results

The FINANCIAL -- Goodyear’s second quarter 2018 sales were $3.8 billion, up 4 percent from a year ago, driven by higher volume and improved price/mix.

Tire unit volumes totaled 39.0 million, a 4 percent increase from 2017. Replacement tire shipments rose 5 percent, attributable to increased industry demand and share gains in EMEA. Original equipment unit volume was up 3 percent, primarily driven by consumer demand in Asia Pacific and global commercial shipments. Consumer replacement shipments in the U.S. outpaced industry growth after adjusting for the impact of the TireHub transition, driven by outperformance in the 17-inch-and-larger category.

Goodyear’s second quarter 2018 net income was $157 million (65 cents per share), up from $147 million (58 cents per share) a year ago. Second quarter 2018 adjusted net income was $150 million (62 cents per share), compared to $177 million (70 cents per share) in 2017. Per share amounts are diluted.

The company reported second quarter segment operating income of $324 million in 2018, down from $369 million a year ago. The decrease was driven by the impacts of higher raw material costs, general cost inflation and lower price/mix, which were partially offset by the benefits from cost savings initiatives and increased sales volume.

Year-to-Date Results

Goodyear’s sales for the first six months of 2018 were $7.7 billion, a 4 percent increase from the 2017 period, primarily due to favorable foreign currency translation, improvements in price/mix and higher tire volume. These increases were partially offset by lower sales in other tire-related businesses.

Tire unit volumes totaled 78.0 million, up 1 percent from 2017, driven by stronger consumer replacement shipments in EMEA, as well as increased consumer OE demand in Asia Pacific and higher global commercial shipments. Replacement tire shipments increased 1 percent. Original equipment volume was essentially flat.

Goodyear’s year-to-date net income of $232 million (96 cents per share) is down from $313 million ($1.23 per share) in the prior year’s period. First half 2018 adjusted net income was $272 million ($1.12 per share), compared to $366 million ($1.44 per share) in the prior year’s period. Per share amounts are diluted.

The company reported first half segment operating income of $605 million in 2018, down from $759 million a year ago. The decrease was attributable to the effect of higher raw material costs and reduced price/mix.

Reconciliation of Non-GAAP Financial Measures

See the note at the end of this release for further explanation and reconciliation tables for Segment Operating Income and Margin; Adjusted Net Income; and Adjusted Diluted Earnings per Share, reflecting the impact of certain significant items on the 2018 and 2017 periods.

Americas’ second quarter 2018 tire unit volume increased approximately 2 percent. Sales of $2 billion were down slightly, reflecting unfavorable foreign currency translation and reduced price/mix. Replacement tire shipments rose 1.5 percent, led by strength in the U.S. despite the impact of transitioning to TireHub. Original equipment unit volume was up 2 percent, driven by growth in both commercial and consumer. The company estimates that a national transportation strike in Brazil restricted growth in the Americas by about 1.5 percent.

Second quarter 2018 segment operating income of $154 million was down 29 percent from the prior year. The decline was driven by the impact of reduced price/mix and increased raw material costs. The lower price/mix reflects the impact of last year’s price reductions, which were partially offset by strong growth in the U.S. within the 17-inch-and-larger category.

Europe, Middle East and Africa’s second quarter 2018 sales increased 13 percent from last year to $1.3 billion, primarily attributable to increased volume. Replacement tire shipments were up 13 percent, driven by the consumer tire business, reflecting increased industry demand and share gains. Original equipment unit volume rose 1 percent.

Second quarter 2018 segment operating income of $100 million was 25 percent higher than the prior year, reflecting the benefits of increased sales volume and favorable price/mix, partially offset by higher raw material costs.

Asia Pacific’s second quarter 2018 sales increased 4 percent from last year to $563 million, driven by increased volume and improved price/mix. Tire unit volumes were 2 percent greater than in the prior year’s period. Original equipment unit volume rose 9 percent, driven by our consumer business in China. Replacement tire shipments were down 3 percent and were impacted by softening market conditions in China.

Second quarter 2018 segment operating income of $70 million was down slightly from last year reflecting lower price/mix, which more than offset the benefits from increased volume.