AKRON — Goodyear suffered double-digit declines in segment operating income for both fiscal 2018 and the fourth quarter, reflecting higher raw material costs and weaker results from other tire-related businesses, among other factors.
Segment operating income for the year fell 18.1 percent to $1.27 billion on 0.6-percent higher sales of $15.5 billion. Goodyear said unfavorable foreign currency translation, which were partially offset by net cost savings and improved overhead absorption, affected the results.
Sales growth was driven by improvements in price/mix, offset partially by unfavorable foreign currency translation.
Goodyear reported tire unit volumes of 159.2 million, unchanged from the prior year, while replacement tire shipments edged up 1 percent. Goodyear said growth in Europe was offset by weakness in Brazil and China.
Goodyear's net income for the year more than doubled to $693 million as it included a net gain after-tax and minority interest of $207 million resulting from the TireHub transaction, net of transaction costs. Goodyear's net income in 2017 included net charges after minority interest of $292 million resulting from net discrete tax items. Full-year 2018 adjusted net income dropped 29.7 percent to $555 million.
For the fourth quarter, segment operating income dropped 28.6 percent to $307 million. The Akron-based tire maker said lower volume and the unfavorable impact of foreign currency translation, partially offset by improved price/mix, net cost savings and improved overhead absorption, also impacted the quarterly results.
Goodyear reported a net income of $110 million, compared with a net loss of $96 million in 2017 period, despite a 4.8-percent drop in sales to $3.87 billion. The decrease was driven by unfavorable currency translation and lower volume, offset by partially improvements in price/mix.
Tire unit volumes of 40.7 million were down 3.1 percent from a year ago. Replacement tire shipments were nearly flat, as weakness in Brazil and China offset growth in Europe. Original equipment unit volume decreased 10 percent, Goodyear said, pointing to lower automotive production in China and India.
"Our teams delivered several operational wins in 2018, including increasing our consumer replacement volume and building our OE pipeline by securing numerous fitments, notably on future electric vehicles," Chairman, CEO and President Richard Kramer said.
"These achievements are a testament to our product innovation, the strength of our distribution network and the value of the Goodyear brand."
The company achieved several "strategic objectives" that he said "strengthen our connected business model and move us closer to our customers, allowing us to improve our service levels and positioning us to be a leader in the changing mobility landscape."
"While many of the macro challenges we faced in 2018 have extended into 2019, we continue to build on what we accomplished last year and remain focused on delivering a higher level of earnings over the longer term."
Operating income in the Americas segment fell 17.5 percent in the fourth quarter to 179 million on 3.2-percent lower sales of $2.11 billion, lowering the operating ratio to 8.5 percent.
Operating income for the full year also dropped, by 22.8 percent to $654 million, on 0.5-percent lower sales of $8.17 billion.
Unit sales in the Americas fell 2.1 percent in the quarter to 19.1 million and were unchanged for the year at 70.9 million.
Operating income dropped slightly in Europe, Middle East and Africa both for the quarter and for the year. In the Asia-Pacific segment, operating income dropped nearly 50 percent to $54 million in 2018. For the full year, operating income declined 24.8 percent to $257 million.
The company paid a quarterly dividend of 16 cents per share of common stock on Dec. 3. The board of directors has declared a quarterly dividend of 16 cents per share payable March 1 to shareholders of record on Feb. 1. The payout represents an annual rate of 64 cents per share.
As a part of its previously announced $2.1 billion share repurchase program, the company repurchased 897,000 shares of its common stock for $20 million during the fourth quarter. For the full year, the company repurchased 8.9 million shares for $220 million. Since 2013, purchases under the program total 52.9 million shares for $1.5 billion.