Goodyear reports improved Q3 earnings despite lower sales

AKRON—Goodyear reported improved financial results for its third quarter as it said its Goodyear Forward program is providing more benefits than first anticipated.

The company gave that optimistic view despite still posting a net let loss and lower sales for both the third quarter and first nine months of 2024, according to data the Akron-based tire maker released shortly after the stock market's closing Nov. 4.

For the third quarter, Goodyear posted a net loss of $34 million, compared with a net loss of $89 million in 2023 Q3. The firm said it realized an adjusted net income of $105 million, slightly better than the $104 million in the prior-year quarter.

Sales for Q3 of 2024 dipped to $4.82 billion, 6.2% lower than the $5.14 billion in revenues for last year's third quarter.

Through the first nine months of 2024, Goodyear reported a net loss of $6 million, significantly better than the $398 million net loss for the corresponding period of 2023. Adjusted net income for the three quarters of this year were $189 million, compared to an adjusted net loss of $75 million last year, according to Goodyear's financial results.

Sales were off 6.8% to $13.9 billion for the first nine months of 2024 from the nearly $15 billion posted a year earlier.

Goodyear pointed specifically to improvements in segment operating income (SOI) as evidence the Goodyear Forward transformation plan is working. For the third quarter, the firm said its SOI was $347 million, up $11 million from a year ago, for a margin of 7.2%. The increase, Goodyear said, reflects $123 million in benefits from the Goodyear Forward plan and $17 million from insurance proceeds, primarily related to storm damage in prior years. These were partly offset by the impact of lower tire volume of $74 million and inflation of $53 million.

Through three quarters, the segment operating income was at $933 million, up $348 million from 2023. That reflected $285 million from Goodyear Forward benefits; $235 million from net price/mix versus raw material costs; $69 million net from insurance proceeds; and $55 million from the negative impact of the Tupelo storm damage in 2023. The gains were partially offset by lower tire volume of $143 million and a headwind of $116 million from inflationary costs.

"As a result of the consistent and strong execution of our Goodyear Forward transformation plan, we successfully achieved four consecutive quarters of segment operating margin expansion. These tangible results are not only a testament to the talent of our team, but also to the strong foundation of Goodyear," CEO and President Mark Stewart said in a statement. "Throughout the company, we are delivering solid results. Due to the strong momentum underway, we are increasing our target for gross run-rate gains from Goodyear Forward to $1.5 billion by the end of 2025."

Stewart said Goodyear has raised guidance for gross benefits from Goodyear Forward to $450 million for 2024 and an additional $750 million in 2025. Goodyear expects to achieve its goal of a 10% SOI margin and 2 to 2.5 times leverage targets in the fourth quarter of 2025, the CEO added.

Goodyear announced the Goodyear Forward transformation plan in November 2023 to create a more profitable enterprise and drive shareholder value creation. The tire maker has increased run rate cost reduction and top line benefits by $200 million above its original $1.3 billion target. The plan, among other things, called for Goodyear to sell its chemicals/synthetic rubber, off-the-road tire and Dunlop brand businesses, with the divestitures to bring in about $2 billion.

Goodyear reached a deal in July to sell its off-the-road tire business to Yokohama Rubber Co. Ltd. in a $905 million cash sale.

In the Americas, tire sales for the third quarter dropped 8.4% to $2.9 billion, driven by declines in replacement volume. Tire unit volume fell 8.3% to 21 million. Its SOI fell $7 million to $251 million.

For the nine months, sales dropped 5.4% to $8.14 billion, but segment operating income of $671 million represented an 8.2% margin, compared to a 4.9% market on an SOI of $440 million in 2023.

Sales for the Europe, Middle East and Africa region fell 1.9% for Q3 to $1.35 billion. Tire units fell to 12.2 million from 12.5 million last year. SOI rose slightly to $24 million, for an operating margin of 1.8%.

For the nine months, revenues dropped 5.5% to $3.97 billion, with SOI coming in at $67 million, compared to $11 million in the first three quarters of 2023.

In Asia-Pacific, revenues fell 5.4% for the third quarter to $618 million, as tire units fell to 9.3 million from 9.9 million. The SOI checked in at $72 million for a margin of 11.7%, compared with $56 million and a margin of 8.6% the prior year.

For the nine months, sales dropped just $3 million, to $1.81 billion, as unit volumes rose to 27.1 million from 26.2 million. SOI was $195 million for a margin of 10.7%, compared to $134 million and a margin of 7.4% last year.

Stewart and Chief Financial Officer Christina Zamarro will share insights during a Nov. 5 investor call at 8:30 a.m. Eastern.