- Global tire unit shipments increase 4%, driven by growth in replacement

- U.S. & European >17” consumer replacement volumes significantly outpace industry growth

- TireHub launch on track; transition ahead of plan

- Company repurchases $75 million of common stock, $100 million year-to-date

AKRON, Ohio, July 27, 2018 – The Goodyear Tire & Rubber Company today reported results for the second quarter and first half of 2018.

“We delivered strong operating performance in the quarter highlighted by impressive volume growth in our mature markets where we regained share, particularly in the more profitable 17 inch and greater rim sizes in the U.S. and Europe,” said Richard J. Kramer, chairman, chief executive officer and president. “Additionally, we achieved our price/mix and net cost savings goals for the quarter.”

“While our execution in the period was robust, macro headwinds are intensifying – including rising raw material costs, a stronger U.S. dollar and softening market conditions in China. We are adjusting our plans accordingly to mitigate the impact of these challenges over the intermediate-term. I remain confident that our strengthening position in the marketplace, along with value created through our strategic initiatives, will allow us to deliver on our 2020 plan,” he added.

“Our new TireHub distribution joint venture in the U.S. is performing exceptionally well out of the gate, and our shipments to the wholesale channel are running ahead of our transition plans. Goodyear’s customer base has demonstrated its loyalty to our brand and I am confident that TireHub’s best-in-class service model, together with added supply from our new Americas plant, will enhance value for our retail and fleet customers,” said Kramer.

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.

Business Segment Results


 Second Quarter
Six Months
(in millions)2018201720182017
Tire Units17.317.134.034.3
Segment Operating Income154218281434
Segment Operating Margin7.6%10.7%7.1%10.9%

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

 Second Quarter
Six Months
(in millions)
Tire Units14.213.028.928.5
Segment Operating Income 10080178181
Segment Operating Margin7.9%7.2%6.9%7.7%

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

 Second QuarterSix Months
(in millions)2018201720182017
Tire Units7.57.315.114.6
Segment Operating Income
Segment Operating Margin12.4%13.1%12.9%13.8%

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.

2018 Outlook

        The company expects its 2018 segment operating income to total between $1.45 billion and $1.5 billion. The company has reduced its second-half outlook from the low end of the prior guidance to reflect a $130 million increase in raw material costs, a $60 million unfavorable swing in foreign currency due to a stronger U.S. dollar, and a $70 million headwind due to softening market conditions in China.

Shareholder Returns

The company declared a quarterly dividend of 14 cents per share of common stock on July 14, 2018, payable on September 4, 2018 to shareholders of record on August 1, 2018. The payout represents an annual rate of 56 cents per share.

As a part of its previously announced $2.1 billion share repurchase program, the company repurchased nearly 3 million shares of its common stock for $75 million during the second quarter, bringing the full-year totals to $100 million and approximately 4 million shares. Since its inception, the company has acquired 48 million shares for $1.4 billion.

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.

Investors, members of the media and other interested persons can access the conference call on the website or via telephone by calling either (877) 876-9176 or (785) 424-1667 before 8:55 a.m. and providing the conference ID “Goodyear.” A taped replay will be available by calling (800) 839-2398 or (402) 220-7208. 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.

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