AKRON (July 27, 2016) — Goodyear reported improved “core segment operating income” for the quarter and six months ended June 30 despite lower sales revenue.
Second quarter core segment operating income — which excludes results from the company's “deconsolidated” Venezuelan subsidiary — was up 3.3 percent over the 2015 period to $531 million, Goodyear reported, while sales fell 7 percent to $3.88 billion. As a result, the operating ratio jumped a point and a half to 13.7 percent.
The Akron-based tire maker attributed the lower revenue to the deconsolidation of the Venezuelan unit, the sale of its North American motorcycle tire business to Sumitomo Rubber Industries Ltd. and unfavorable currency translations. Unit sales volume was up 2 percent to 41.5 million units.
Net income was up 5.2 percent to $202 million.
In his summary of the quarter's results, Chairman and CEO Richard Kramer noted all three business units achieved operating margins above 11 percent.
“Industry fundamentals remain favorable across many of our key markets,” Mr. Kramer said, “and demand for our premium, high-value-added tires is strong.
“Our focus remains on the disciplined execution of our strategy and delivering on our financial targets.”
For the first half, Goodyear reported slightly higher operating income of $950 million on 7.7-percent lower sales of $7.57 billion. Net income fell 7.2 percent to $386 million.
Tire unit volumes were up 2 percent to 83 million, Goodyear said, driven by growth in Asia/Pacific — primarily in Japan and China. Replacement shipments were up 3 percent while OE volume was down 1 percent.
In the Americas business unit, segment operating income in the quarter fell 19 percent to $291 million, due to the deconsolidation of the Venezuela unit, higher conversion cost, an out-of-period adjustment primarily attributable to 2012 and related to the elimination of intracompany profit, as well as lower volume, Goodyear said.
Sales in the unit fell 13.5 percent to $2.09 billion, reflecting a 6-percent drop in tire untis sold, the company said, due in large part to the sale of the former Goodyear Dunlop Tires North America Ltd. business and the deconsolidation of Venezuela. Replacement and OE tire shipments were down 2 and 15 percent, respectively.
Excluding the negative effects of Venezuela and the Goodyear Dunlop sale, tire unit volume was down 3 percent.
First-half operating income in the Americas unit was down 9.1 percent to $551 million, while sales fell 13.2 percent to $4.04 billion, reflecting unfavorable foreign currency translation of $225 million and the deconsolidation of Venezuela.