Goodyear Q4 earnings, replacement tire sales decline

AKRON — Goodyear's earnings declined but were "ahead of expectations" in a fourth quarter that saw replacement volume drag and original-equipment volume increase.

The Americas and Asia-Pacific units showed strong results, the company said.

"These results reflected our strongest price/mix versus raw materials since the fourth quarter of 2012," Goodyear said in a letter to investors.

"Additionally, we generated the strongest fourth-quarter operating cash flow since the pandemic."

Year-over-year global replacement tire sales fell 6% in the fourth quarter, while original-equipment (OE) sales increased 6%.

Sales decreased 4.8% from last year "driven by the impact of lower replacement volume and lower third-party chemical sales."

Fourth-quarter 2023 net loss was $291 million compared to a net loss of $104 million a year ago.

"The change in net loss was primarily due to a goodwill impairment charge related to our EMEA segment and higher rationalization charges, partly offset by higher segment operating income," Goodyear said.

"After adjusting for significant items, our fourth-quarter net income was $135 million, compared to $20 million in the prior year's quarter."

Goodyear reported fourth-quarter segment operating income of $383 million, up $147 million compared to the fourth quarter of 2022.

Goodyear reported its fourth-quarter segment operating margin of 10.1% was the highest quarterly result since 2021.

"This is evident in our consumer replacement margins, which expanded significantly during the fourth quarter," Goodyear said.

The Americas segment volume was down 8.8% compared to 2022. Goodyear said double-digit declines in South America were buoyed by U.S. sales.

"While our U.S. volume has seen a significant amount of volatility since 2020, our overall consumer replacement share is in line with our strategy to focus on profitable growth," Goodyear said.

Commercial truck replacement volume declined 12% "on continued industry weakness."

Net sales in the Americas of $3.1 billion decreased by $333 million, or 9.8%, compared with the fourth quarter of 2022. Goodyear said the decline was driven by 8.8% lower volume.

Segment operating income in the Americas was $309 million compared with $279 million a year ago.

"Lower price/mix includes the impact of contractual raw material price adjustments with our OE and fleet customers and continued weakness in the commercial truck tire industry," Goodyear said.

Overall volume in the Americas decreased by 2.3 million units compared to 2022.

"The decrease in replacement volume reflects a strong comparable in the U.S. consumer tire market, industry destocking in Latin America and continued commercial weakness," Goodyear said.

U.S. consumer replacement was "in line with year-to-date results, with continued strength in premium brands."

"The OE result primarily reflects UAW strike-related impacts during the quarter and weaker commercial truck build rates given weak trucking industry conditions," the company said.

Goodyear said dealer sell out was down slightly in the fourth quarter compared to the same 2022 period — in line with the overall market. Goodyear's U.S. consumer replacement channel inventories fell about 5% compared to the prior-year period.

Looking ahead, Goodyear said to expect the consumer replacement segment to be down "low-single digits" this year.

Goodyear expects the U.S. commercial tire industry to be down slightly this year, "with underlying strong growth in imports."