AKRON — In its third quarter earnings report, Goodyear expressed optimism in the Americas and Asia Pacific segments moving forward, but noted Europe remains weak.
Overall, the business is down. Third quarter sales decreased 3.2% from the same period last year. Goodyear said this was driven by weaker commercial segment and lower specialty tire sales.
Goodyear CEO Rich Kramer said despite challenges, the company delivered positive results thanks to "strong execution amid improving industry conditions.
"This was the first quarter in two years where the benefits of price/mix vs. raw materials exceeded inflation," he said.
Goodyear reported a net loss of $89 million, compared to net income of $44 million last year.
"The decrease in net income was primarily due to higher rationalization costs of $153 million," the company said, noting rationalization and workforce reorganization plans in Europe and Asia-Pacific.
In late September, the company announced an Asia-Pacific "rationalization plan" that proposed eliminating 700 positions, exiting nine warehouses, and selling around 100 retail and fleet locations in the Asia-Pacific region.
At that time, Goodyear also announced it would distribute through a third-party in Australia and New Zealand.
Kramer described the Europe segment as "weak" and said it was "not reflective of what the business can deliver."
He said Europe market conditions reflect "above-average channel inventory levels driven by softer sell-out trends and an influx of low-cost imports."
In early September, Goodyear announced plans to cut 1,200 jobs throughout its Europe, Middle East and Africa (EMEA) region. Around the same time, Goodyear also announced a plan to halve capacity at its tire plant in Fulda, Germany.
At the time, Kramer indicated that EMEA was a particular focus of the cost-savings actions, as the region suffered losses over three — now four — quarters.
The savings from the restructuring is expected to be around $100 million over three years.
Adjusted net income for the third quarter, Goodyear said, was $104 million, compared to $116 million in Q3 2022.
Tire units totaled 45.3 million, down 2.8% from Q3 2022.
Volume remained below 2019 levels — down 5% replacement, 2% original equipment (OE). But Kramer said there are signs of improving conditions, especially in the U.S.
In the Americas segment, replacement units were down 5% year-over-year. Goodyear attributed the decline to a weaker commercial market, declines in Latin America, and the impact from tornado damage at their Tupelo, Miss., facility.
Prior to the April 1 storm, Goodyear said volumes were "flat" compared to 2022. In an 8K statement with the Securities and Exchange Commission in May, Goodyear claimed the plant closure would cost the company up to $130 million in lost sales.
On an investor call Nov. 7, Kramer said Goodyear's strength in the U.S. premium market helped to mitigate some of those losses.
"Eighteen-inch and above are growing," he said, "products, brand, technology — for both Goodyear and Cooper — play really well there."
Goodyear said retail "sell-outs" in the Americas were up slightly in the quarter.
"The consumer business is still down. ... It's not back to normal," Kramer said. Goodyear, he added, will "stabilize" earnings to capitalize on gains from the recent moves.
Goodyear will hold an investor call Nov. 15 to offer an update on the Strategic and Operational Review Committee — formed in the response the Elliot Investment letter earlier this year.