Goodyear more than doubled its operating income in the first quarter, to $179 million from $79 million in Q1 2023. (The Goodyear Tire & Rubber Co.)
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Losses at The Goodyear Tire & Rubber Co. narrowed in the first quarter of 2024 due in part to an ongoing restructuring that won positive reviews from analysts.
Goodyear reported a Q1 net loss of $57 million, or 20 cents per diluted share, compared with a loss of $101 million, or 35 cents, a year earlier. Goodyear’s Q1 revenue slid 8% to $4.54 billion, compared with $4.94 billion in the year-ago period.
Globally, Goodyear tire sales totaled 40.4 million in Q1, down 3.3% from 41.8 million tires a year earlier. Tire sales in its Americas division totaled 19 million, down 7.4% compared with 20.5 million a year earlier. Goodyear’s Americas Q1 revenue totaled $2.59 billion, a decrease of 9.7% from $2.87 billion in the previous year, driven by lower replacement volumes and unfavorable price/mix due to continuing commercial truck weakness and contractual price adjustments, the manufacturer said.
Competition from imported tires also is playing a factor, the Akron, Ohio-based company said, noting that U.S. commercial vehicle replacement demand rose 23%, with a large slice of that sucked up by what Goodyear deems low-price imports.
Against this backdrop, the company is shoring up its expenses.
Announced in November, the company’s Goodyear Forward restructuring plan focuses on asset sales and cost reduction. Among those sales will be the company’s chemical business and its Dunlop brand. Recalibrating the business also involves the closure of a number of manufacturing plants, although none is in the United States.
That said, CEO Mark Stewart said during a May 7 earnings call that working practices were changing at the American plants, including the Topeka, Kan., and Danville, Va., facilities that produce tires for commercial vehicles.
“We have put together very detailed, plan-specific factory plans,” said Stewart, a former Stellantis and Amazon executive who took the reins at Goodyear in January. “We are reviewing the details of these efficiency plans with our plant operating teams, together with the leadership team, on a weekly basis.”
In addition, I spent the last month visiting our manufacturing sites in the U.S. [in order] to support both these initiatives and to get to know our teams and to get to know the folks on our production floor. The work in our factories includes implementing improvements to drive increases in our operating equipment, uptime reliability, reducing the complexity in our factories, reducing the number of configurations, preparing to run several products on common product platforms as well as rationalizing our materials. We are also working to reduce overtime and third-party contractor spend as we move forward,” he told analysts.
In the Americas, Q1 segment operating income totaled $179 million, more than double the prior-year period’s $79 million. “By region, Americas SOI of $179 million came in well above our $101 million forecast and consensus at $82 million. Margin in the region was 6.9%, compared with our/Street estimates of 3.8%/3%,” noted Deutsche Bank’s Rosner.
Still, a weak commercial truck industry hurt Goodyear’s bottom line, Chief Financial Officer Christina Zamarro told analysts.
While analysts expected sales of $4.78 billion, they saw positives in the results.
“[The] results were modestly better than expected, helped by growing traction of cost efficiency initiatives,” observed JP Morgan Securities Analyst Ryan Brinkman in a May 8 research note.
“Goodyear’s better-than-expected Q1 performance showcased solid initial traction with its Goodyear Forward turnaround plan, prompting management to increase its savings target for 2024, and giving us added confidence in the company’s improving margin trajectory over the next two years,” added Deutsche Bank Research Analyst Emmanuel Rosner in a May 8 research note.
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