Goodyear Reports Fourth Quarter, Full-Year 2018 Results

February 8, 2019

- Fourth-quarter revenue per tire up 1%, excluding foreign exchange

- Price/mix momentum turns positive

- U.S. retail sell-out volume up 2% for the quarter

- TireHub distribution capabilities and service levels on plan

- Successfully launched Roll retail pilot; continued expanding Mobile Tire Shop network

AKRON, Ohio, Feb. 8, 2019 – The Goodyear Tire & Rubber Company today reported results for the fourth quarter and full-year of 2018.

“Our teams delivered several operational wins in 2018, including increasing our consumer replacement volume and building our OE pipeline by securing numerous fitments, notably on future electric vehicles,” said Richard J. Kramer, chairman, chief executive officer and president. “These achievements are a testament to our product innovation, the strength of our distribution network and the value of the Goodyear brand.”

 “Additionally, we achieved a number of strategic objectives throughout the year that strengthen our connected business model and move us closer to our customers, allowing us to improve our service levels and positioning us to be a leader in the changing mobility landscape. While many of the macro challenges we faced in 2018 have extended into 2019, we continue to build on what we accomplished last year and remain focused on delivering a higher level of earnings over the longer term.”

Goodyear’s fourth quarter 2018 sales were $3.9 billion, down 5 percent from $4.1 billion a year ago, driven by unfavorable currency translation and lower volume. These effects were partially offset by improvements in price/mix.

Tire unit volumes totaled 40.7 million, down 3 percent from 42.0 million a year ago.  Replacement tire shipments were nearly flat compared with a year ago, as growth in Europe was offset by weakness in Brazil and China. Original equipment unit volume was down 10 percent, primarily due to lower automotive production in China and India.

Goodyear’s net income was $110 million ($0.47 per share) in the fourth quarter of 2018 compared to a net loss of $96 million ($0.39 per share) a year ago. Fourth quarter 2018 adjusted net income was $120 million ($0.51 per share) compared to $245 million ($0.99 per share) in 2017. Per share amounts are diluted.

The company reported fourth quarter segment operating income of $307 million in 2018, down from $430 million a year ago. The decrease reflects higher raw material costs, weaker results from other tire-related businesses, lower volume and the unfavorable impact of foreign currency translation, which were partially offset by improved price/mix, net cost savings and improved overhead absorption.

Full-Year Results

Goodyear’s 2018 sales were $15.5 billion, up 1 percent from the prior year, driven by improvements in price/mix, partially offset by unfavorable foreign currency translation. Tire unit volumes totaled 159.2 million, unchanged from the prior year. Replacement tire shipments were up 1 percent. Original equipment unit volume was down 4 percent.

Goodyear’s 2018 net income of $693 million ($2.89 per share) was up from $346 million ($1.37 per share) in 2017. Goodyear’s net income in 2018 included a net gain after-tax and minority interest of $207 million resulting from the TireHub transaction, net of transaction costs. Goodyear’s net income in 2017 included net charges after minority interest of $292 million resulting from net discrete tax items. Full-year 2018 adjusted net income was $555 million ($2.32 per share), down from $790 million ($3.12 per share) a year ago.

The company reported 2018 segment operating income of $1.3 billion in 2018, down 18 percent from $1.6 billion a year ago. The decrease was primarily attributable to increased raw material costs, weaker results from other tire-related businesses and unfavorable foreign currency translation, which were partially offset by net cost savings and improved overhead absorption.

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.

 

Business Segment Results

Americas

  Fourth Quarter Twelve Months
(in millions) 2018 2017 2018 2017
Tire Units 19.1 19.5 70.9 70.9
Sales $2,114 $2,184
$8,168 $8,212
Segment Operating Income 179 217 654 847
Segment Operating Margin 8.5% 9.9% 8.0% 10.3%


Americas’ fourth quarter 2018 sales decreased 3 percent from last year to $2.1 billion. Sales reflect the negative effect of foreign currency translation and lower volume, partially offset by improved price/mix. Replacement tire shipments were down 2 percent, driven by a decrease of 14 percent in commercial replacement. U.S. consumer replacement volume was flat reflecting a tough comparison of an 8 percent increase in the prior year. Original equipment unit volume was down 4 percent.

Fourth quarter 2018 segment operating income of $179 million was down 18 percent from the prior year. The decrease reflects higher raw material costs, increased product liability costs, reduced earnings from third-party chemical sales, the unfavorable effect of foreign currency translation and reduced volume, partially offset by a favorable indirect tax settlement in Brazil and improved overhead absorption.
 

Europe, Middle East and Africa

  Fourth Quarter Twelve Months
(in millions) 2018 2017 2018 2017
Tire Units 13.7 13.7 57.8 57.1
Sales
$1,210 $1,264 $5,090 $4,928
Segment Operating Income
74 96 363 367
Segment Operating Margin 6.1% 7.6% 7.1% 7.4%


Europe, Middle East and Africa’s fourth quarter 2018 sales of $1.2 billion were down 4 percent from the prior year, driven by unfavorable foreign currency translation, partially offset by price/mix improvements. Replacement tire shipments were up 1 percent. OE tire volume decreased 5 percent.

Fourth quarter 2018 segment operating income of $74 million was 23 percent less than the prior year. The decrease was driven by increased raw material costs, weaker results from other tire-related businesses and the negative effect of foreign currency translation. These declines were partially offset by improved price/mix.

 

Asia Pacific

  Fourth Quarter Twelve Months
(in millions) 2018 2017 2018 2017
Tire Units 7.9 8.8 30.5 31.2
Sales $552 $623 $2,217 $2,237
Segment Operating Income
54 117 257 342
Segment Operating Margin 9.8% 18.8% 11.6% 15.3%


Asia Pacific’s fourth quarter 2018 sales decreased 11 percent from last year to $552 million, reflecting weaker volume and unfavorable foreign currency translation. Tire unit volumes were down 10 percent from last year’s record fourth quarter. Replacement tire shipments were down 2 percent. Original equipment unit volume was down 22 percent, reflecting weak vehicle production in China.

Fourth quarter 2018 segment operating income of $54 million was down 54 percent from last year’s record quarter, reflecting lower volume, higher raw material costs and unfavorable foreign currency translation.

Shareholder Return Program

The company paid a quarterly dividend of 16 cents per share of common stock on Dec. 3, 2018. The Board of Directors has declared a quarterly dividend of 16 cents per share payable March 1, 2019, to shareholders of record on Feb. 1, 2019. The payout represents an annual rate of 64 cents per share.

As a part of its previously announced $2.1 billion share repurchase program, the company repurchased 897 thousand shares of its common stock for $20 million during the fourth quarter. For the full year, the company repurchased 8.9 million shares for $220 million. Since 2013, purchases under the program total 52.9 million shares for $1.5 billion. We do not expect to make a significant amount of share repurchases in 2019.

Conference Call

Goodyear will hold an investor conference call at 9 a.m. today. Prior to the commencement of the call, the company will post the financial and other related information that will be presented on its Investor Relations website: http://investor.goodyear.com.

Participating in the conference call will be Richard J. Kramer, chairman, chief executive officer and president; and Darren R. Wells, executive vice president and chief financial officer. 

Investors, members of the media and other interested persons can access the conference call on the website or via telephone by calling either (800) 895-3361 or (785) 424-1062 before 8:55 a.m. and providing the conference ID “Goodyear.” A taped replay will be available by calling (800) 839-4014 or (402) 220-2983. The replay will also remain available on the website.

Goodyear is one of the world’s largest tire companies. It employs about 64,000 people and manufactures its products in 47 facilities in 21 countries around the world. Its two Innovation Centers in Akron, Ohio, and Colmar-Berg, Luxembourg, strive to develop state-of-the-art products and services that set the technology and performance standard for the industry. For more information about Goodyear and its products, go to www.goodyear.com/corporate.  GT-FN

 

Certain information contained in this press release constitutes forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. There are a variety of factors, many of which are beyond our control, that affect our operations, performance, business strategy and results and could cause our actual results and experience to differ materially from the assumptions, expectations and objectives expressed in any forward-looking statements. These factors include, but are not limited to: our ability to implement successfully our strategic initiatives; actions and initiatives taken by both current and potential competitors; increases in the prices paid for raw materials and energy; a labor strike, work stoppage or other similar event; foreign currency translation and transaction risks; deteriorating economic conditions or an inability to access capital markets; work stoppages, financial difficulties or supply disruptions at our suppliers or customers; the adequacy of our capital expenditures; our failure to comply with a material covenant in our debt obligations; potential adverse consequences of litigation involving the company; as well as the effects of more general factors such as changes in general market, economic or political conditions or in legislation, regulation or public policy. Additional factors are discussed in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. In addition, any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.

 

Download the Financial Statements