Company History

- Second quarter results in line with guidance

- Goodyear net income of $147 million for second quarter, $313 million for first half

- Segment operating income of $361 million for second quarter, $746 million for first half

- Germany plant closure complete, $45 million in annual savings expected

- Company updates 2017 segment operating income guidance

AKRON, Ohio, July 28, 2017 – The Goodyear Tire & Rubber Company today reported results for the second quarter and first half of 2017.

“Our second quarter results reflect the impact of volatile raw material costs and an increasingly challenging competitive environment, particularly in the United States and Europe,” said Richard J. Kramer, chairman and chief executive officer.

“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,” he said.

“The combination of these factors has led to a highly unusual first half environment, particularly given the favorable trends in miles driven, gasoline prices and unemployment that are generally supportive of our industry,” Kramer added.

“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,” he said. “Despite the near-term challenges, I am no less optimistic about our ability to drive our strategic priorities against the favorable industry megatrends.”  

Goodyear’s second quarter 2017 sales were $3.7 billion, down from $3.9 billion a year ago, with the decrease largely attributable to lower tire unit volume, partially offset by improved price/mix.

Tire unit volumes totaled 37.4 million, down 10 percent from 2016, primarily in Europe, Middle East and Africa and the Americas. Replacement tire shipments were down 11 percent. Original equipment unit volume was down 8 percent.

Goodyear’s second quarter 2017 net income was $147 million (58 cents per share), down from $202 million (75 cents per share) in the year-ago quarter. Second quarter 2017 adjusted net income was $177 million (70 cents per share), down from $314 million ($1.16 per share) in 2016. Per share amounts are diluted.

The company reported second quarter segment operating income of $361 million in 2017, down from $531 million a year ago. The decrease reflects higher raw material costs and the impact of lower volume, which were partially offset by improved price/mix and cost savings.

Year-to-Date Results

Goodyear’s sales for the first six months of 2017 were $7.4 billion, down 2 percent from the 2016 period, reflecting lower tire unit volume, partially offset by improved price/mix.

Tire unit volumes totaled 77.4 million, down 7 percent from 2016. Replacement tire shipments were down 6 percent, reflecting increased competition. Original equipment unit volume was down 8 percent, driven by lower auto production.

Goodyear’s year-to-date net income of $313 million ($1.23 per share) is down from
$386 million ($1.43 per share) in 2016’s first half. All per share amounts are diluted.

The company reported first half segment operating income of $746 million in 2017, down from $950 million a year ago. The decrease was driven by higher raw material costs and the impact of lower volume, partially offset by improved price/mix and cost savings.

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 2017 and 2016 periods.

Business Segment Results

Americas

Americas’ second quarter 2017 sales decreased 3 percent from last year to $2.0 billion. Sales reflect a 9 percent decrease in tire unit volume, primarily in the consumer tire business. Replacement tire shipments were down 8 percent, driven by lower volumes in 16-inch-and-below rim diameter tires in the United States due to increased competition. Original equipment unit volume was down 12 percent, driven by lower auto production.

Second quarter 2017 segment operating income of $213 million was down 27 percent from the prior year. The decrease was driven by higher raw material costs and the impact of lower volume, partially offset by improved price/mix.
 

Europe, Middle East and Africa

Europe, Middle East and Africa’s second quarter sales decreased 12 percent from last year to $1.1 billion. Sales reflect a 16 percent decrease in tire unit volume, primarily in the consumer tire business, partially offset by improved price/mix. Replacement tire shipments were down 18 percent, driven by increased competition and lower summer tire industry demand. Original equipment unit volume was down 11 percent.

Second quarter 2017 segment operating income of $77 million was 48 percent below the prior year driven by the impact of lower volume and higher raw material costs, partially offset by improved price/mix and cost savings.
 

Asia Pacific

Asia Pacific’s second quarter 2017 sales increased 3 percent from last year to $543 million, reflecting improved price/mix. Tire unit volumes were flat. Replacement tire shipments were down
3 percent. Original equipment unit volume was up 2 percent.  

Second quarter 2017 segment operating income of $71 million was down 23 percent from last year, driven by higher raw material costs, partially offset by improved price/mix.

Germany Plant Closure

The company, on July 14, closed its tire manufacturing facility in Philippsburg, Germany. As previously announced, the action is part of Goodyear’s global strategy to focus on premium, larger-rim diameter tires.

This closure eliminates approximately 6 million units of capacity and is expected to provide savings of about $45 million on an annualized basis beginning in 2018.

2017 Outlook

The company now expects its 2017 segment operating income to total between $1.6 billion and $1.65 billion.

Shareholder Return Program

The company paid a quarterly dividend of 10 cents per share of common stock on June 1, 2017. The Board of Directors has declared a quarterly dividend of 10 cents per share payable September 1, 2017, to shareholders of record on August 1, 2017.

As a part of its previously announced $2.1 billion share repurchase program, the company repurchased 147,000 shares of its common stock for $5 million during the second quarter. Since its inception, purchases under the program total 32.1 million shares for $943 million.

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 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 (888) 632-3385 or (785) 424-1674 before
8:55 a.m. and providing the Conference ID “Goodyear.” A taped replay will be available by calling (800) 283-5758 or (402) 220-0863. The replay will also remain available on the website.

Goodyear is one of the world’s largest tire companies. It employs about 65,000 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.

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