AKRON — Goodyear expects steady growth throughout 2023 as many outside factors, such as raw-materials costs and excess industry volume stabilize. Goodyear officials spoke about demand, investments and the integration of Cooper Tire with the financial community on Feb. 9.
Goodyear expects steady tire market growth in 2023
Christina L. Zamarro, Goodyear executive vice president and chief financial officer, told investors the company expects growth in both earnings and margins.
"Our goal is for segment operating costs to approach 2022 levels with volumes stabilizing and given lower year-over-year raw-materials cost increases that we're expecting in the second quarter," Zamarro said.
"Assuming a relatively stable outlook, then we would see the benefits in the second half of the year of higher volume, strong growth in Asia Pacific driven by recovery in China, and lower inflation levels than we're expecting in the first half of the year.
"Historically this has been a time in the cycle that we have seen both growth in our earnings and margins as well," she added.
Tire demand weakened in the fourth quarter because of excess inventory in the market, and Goodyear slowed production in response.
"We feel pretty good about North America, a little slow to start, with a strong first half coming," Goodyear President, CEO and Chairman Rich Kramer said.
In the Americas, channel inventory is up about 10%, he said.
"Our distributors are really rebuilding their inventory. We didn't see any buy-aheads in anticipation of any price reductions or anything like that," Kramer said. "It's a pretty healthy place, and I would say in line with the expectations of where the market is going in '23."
Goodyear continued to grow in the fourth quarter though at a slower pace amid weaker overall volume demand and challenges in Europe.
Net sales grew 6% compared with fourth quarter of 2021 to $5.37 billion, the company reported Feb. 8. The company said that while unit volume was down 3% from 2021, revenue per tire was up 17% versus the same period in 2021.
Goodyear reported a net loss of $104 million (compared with $553 million of income in prior year); and adjusted net income of $20 million (compared with $162 million in prior year).
Goodyear scaled back some investments, Kramer said, but continues to allocate funds for long-term projects.
"We're comfortable with what we spend. There are growth projects that we are going to continue to move forward with," he said.
Among investment projects disclosed in the past year are:
- $200 million to increase production capacity for radial passenger tires at a plant in Kunshan, China, according to information from Kunshan Development Zone.
- $125 million over five years to modernize production of truck and OTR tires at its 77-year-old tire plant in Topeka, Kan.; and
- $160 million to modernize a 62-year-old tire plant in Amiens, France, in order to accommodate production of larger-rim-diameter tires and enhance automation.
One long-term focus is development of intelligent tires that Kramer describes as "a connected tire that improves the safety and performance of vehicles, and it actually has a role that becomes part of those vehicles' operating systems in terms of how its integrated to the vehicle and service element of it."
Kramer added that while not "revenue-changing today," the company is excited to play a role in the evolution of mobility.
"That's something we're thinking deeply about, and we're making great progress on going forward," he said.
Kramer said Goodyear is happy with how the Cooper Tire integration has progressed, and that Goodyear is selling Cooper-brand tires in its retail stores. He said the integration is progressing with care by design.
"There are certain distribution elements of how Cooper goes to market, how they sell to distributors, and that process is one of the reasons that we wanted to combine Cooper with Goodyear," Kramer said.
"They do some of those things really well, and we are not going to touch those. We are going to make sure that what they did really well — candidly what they were better at than we are — we're going to keep the best of that, while also integrating where it makes sense to do."
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