Goodyear: Sales, income down again in Q2 2017
A combination of raw material cost volatility, a challenging competitive environment and weakening demand in certain segments and markets have resulted in another quarter of lower net sales and income for Goodyear Tire & Rubber. In the three months to 30 June 2017, net sales declined 5.0 per cent to US$3.69 billion while operating income was down 32.0 per cent to $361 million. Net income dropped 26.7 per cent to $147 million ($0.58 per share), with adjusted net income amounting to $177 million ($0.70 per share), down 43.6 per cent from a year earlier.
Tyre unit volumes for the quarter totalled 37.4 million, down ten per cent from 2016, with this decrease primarily occurring in Europe, Middle East and Africa (original equipment -11%, replacement -18%) and the Americas (original equipment -12%, replacement -8%). Global replacement tyre shipments were down 11 per cent and original equipment unit volume was down eight per cent.
For the first half of the year, net sales were, at $7.39 billion, down 2.44 per cent year-on-year, a result that, although partially offset by improved price/mix, reflects lower tyre unit volume. The company reported first half segment operating income of $746 million in 2017, down 21.5 per cent from $950 million a year ago. Year-to-date net income of $313 million ($1.23 per share) is down 18.9 per cent from $386 million in the first half of 2016.
Tyre unit volumes totalled 77.4 million in the first half of the year, down seven per cent from 2016. Replacement tyre shipments were down six per cent, a result that Goodyear attributes to increased competition. Original equipment unit volume was down eight per cent, driven by lower vehicle production.
“In addition to higher raw material costs, we have seen a weakening in OE and consumer replacement demand across many of our key markets during the first half, despite strong underlying industry fundamentals,” said Richard J. Kramer, Goodyear’s chairman and chief executive officer.
“The combination of these factors has led to a highly unusual first half environment, particularly given the favourable trends in miles driven, gasoline prices and unemployment that are generally supportive of our industry,” Kramer added.
Goodyear now expects its 2017 segment operating income to total between $1.6 billion and $1.65 billion. “In light of the challenging global marketplace in the first half of 2017, we have lowered our segment operating income expectations for the remainder of the year. Despite the near-term challenges, I am no less optimistic about our ability to drive our strategic priorities against the favourable industry megatrends,” commented Kramer.