- Goodyear net income of $75 million, segment operating income of $281 million
- Market outperformance in U.S., Europe in ≥ 17-inch rim size segment
- Americas operating income of $127 million, operating margin of 6.6%
- Europe, Middle East and Africa operating income of $78 million, operating margin of 5.9%
- Asia Pacific operating income of $76 million, operating margin of 13.3%
- TireHub to further strengthen company’s aligned distribution network, value proposition
- Company reaffirms 2018 segment operating income guidance of $1.8-$1.9 billion excluding
TireHub transition; confirms 2020 segment operating income target of $2.0-$2.4 billion
AKRON, Ohio, April 25, 2018 – The Goodyear Tire & Rubber Company today reported results for the first quarter of 2018.
“We are pleased with our first quarter results given higher raw material costs and weaker demand than we expected in the quarter,” said Richard J. Kramer, chairman, chief executive officer and president. “These results were highlighted by our performance in the 17-inch-and-larger segment in consumer replacement, which delivered more than double the industry growth in the U.S. and Europe,” he added.
Goodyear expects to benefit from its recently announced plan to establish TireHub, a leading national tire distribution joint venture in the United States. The new venture will allow the company to work more closely with its customers in the future and deliver an enhanced brand experience for consumers as buying habits continue to evolve.
“TireHub will deliver best-in-class service for our retail and fleet customers and will be the cornerstone of our aligned distribution network, including our company-owned retail stores,” said Kramer. “TireHub will strengthen our ability to promote our premium brands, our industry-leading e-commerce solution and our strategy of targeting the industry’s most profitable, large rim size segments. This agreement increases our confidence in delivering on our long-term targets.
Goodyear’s first quarter 2018 sales were $3.8 billion, up 4 percent from a year ago. Tire unit volumes totaled 39 million, down 2.5 percent from 2017. Original equipment unit volume was down 4 percent, primarily driven by declines in the less-than-17-inch rim size segment in EMEA. Replacement tire shipments were down 2 percent, largely due to reduced industry demand for consumer tires in the U.S. and Europe.
Goodyear’s first quarter 2018 net income was $75 million (31 cents per share), down from $166 million (65 cents per share) a year ago. First quarter 2018 adjusted net income was $122 million (50 cents per share), compared to $189 million (74 cents per share) in 2017. Per share amounts are diluted.
The company reported first quarter segment operating income of $281 million in 2018, down from $390 million a year ago. The decrease was driven by the impact of higher raw material costs.
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
|Segment Operating Income||127||216|
|Segment Operating Margin||6.6%||11.0%|
Americas’ first quarter 2018 tire unit volume was down 3 percent. Sales of $1.9 billion were down 2 percent primarily due to lower unit volume. Original equipment unit volume was down 3 percent driven by production declines in the U.S. Consumer replacement tire shipments in the U.S. were down 3 percent which outperformed USTMA industry members, who were down 5 percent.
First quarter 2018 segment operating income of $127 million was down 41 percent from the prior year. The decline was driven by increased raw material costs, lower price/mix and the effect of lower volume.
Europe, Middle East and Africa
|Segment Operating Income||78||101|
|Segment Operating Margin||5.9%||8.2%|
Europe, Middle East and Africa’s first quarter 2018 sales increased 7 percent from last year to $1.3 billion, due to favorable foreign currency translation and improved price/mix, partially offset by reduced tire volume. Original equipment unit volume was down 14 percent, primarily driven by declines in the less-than-17-inch rim size segment. Replacement tire shipments were down 2 percent, driven by decreased industry demand in the consumer business.
First quarter 2018 segment operating income of $78 million was down 23 percent from the prior year because of higher raw material costs, which more than offset improvements in price/mix, and lower volume.
|Segment Operating Income||76||73|
|Segment Operating Margin||13.3%||14.5%|
Asia Pacific’s first quarter 2018 sales increased 14 percent from last year to $571 million primarily because of improved price/mix, favorable foreign currency translation and higher tire volumes. Tire unit volumes were up 4 percent. Original equipment unit volume was up 11 percent. Replacement tire shipments were flat.
First quarter 2018 segment operating income of $76 million was up 4 percent from last year reflecting higher volume and reduced conversion costs, which were partially offset by higher raw material costs, net of price/mix improvements.
On April 16, 2018, the company announced an agreement with Bridgestone Americas, Inc. to form TireHub, LLC, a 50/50 joint venture that will combine Goodyear’s company-owned wholesale distribution business and Bridgestone’s tire wholesale warehouse business. The transaction is expected to close in June 2018, subject to customary closing conditions and regulatory approvals. In conjunction with this transaction, the Company expects to transition volume representing approximately 10 million units of annual sales – primarily to TireHub, but to other aligned distributors as well – beginning during the second quarter of 2018. Given the temporary disruption associated with the start-up of TireHub, the Company expects a near-term reduction in volume of up to 1.5 million units in 2018.
The company reaffirmed its 2018 segment operating income guidance of $1.8 to $1.9 billion, excluding the TireHub transition, and confirmed its 2020 segment operating income target of $2.0 to $2.4 billion.
The company paid a quarterly dividend of 14 cents per share of common stock on March 1, 2018. The Board of Directors has declared a quarterly dividend of 14 cents per share payable June 1, 2018, to shareholders of record on May 1, 2018.
As a part of its previously announced $2.1 billion share repurchase program, the company repurchased approximately 875 thousand shares of its common stock for $25 million during the first quarter. Since its inception, purchases under the program total 45 million shares for $1.3 billion.
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 Laura K. Thompson, 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 (877) 888-4291 or (785) 424-1878 before
8:55 a.m. and providing the Conference ID “Goodyear.” A taped replay will be available by calling (800) 839-1198 or (402) 220-0458. 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 48 facilities in 22 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.