AKRON — Goodyear reported double-digit declines in operating income for the three- and nine-month periods ended Sept. 30 on the negative effects of lower sales volumes, higher raw materials costs and other factors.
Segment operating income fell 18.8% in the quarter to $294 million and 27.3% in the nine months to $703 million, cutting the earnings/sales ratio to 7.7% in the quarter and 6.4% for the nine months.
Revenue fell 3.2% in the quarter to $3.8 billion, driven by unfavorable foreign currency translation and lower third-party chemical sales, and 4.9% for the nine months to $11.6 billion.
Net income plunged 75% in the quarter to $88 million and 86.1% in the nine months to $81 million.
The firm's tire unit volumes totaled 40.3 million in the quarter, down 1% from 2018, as OE unit volume fell 5%, driven by lower global vehicle production, Goodyear said. Replacement tire shipments increased 1%.
The company did not issue an overall outlook for the remainder of fiscal 2019, but Chairman, President and CEO Richard Kramer said Goodyear experienced "continued strength" in its U.S. consumer replacement business and "solid growth" in Brazil, yielding "positive momentum in these important markets as we head into the final months of the year."
The Americas business unit posted a 9.8% drop in operating income for the quarter on 2.8% lower revenue, Goodyear said. Overall tire unit volume rose 0.6% to 40.3 million units, buoyed by 3% higher replacement tire shipments. OE unit volume, on the other hand, fell 7% reflecting lower North American vehicle production, including the impact of a strike at General Motors and "strategic fitment choices," Goodyear said.
Revenue in Europe/Middle East/Africa fell 6.6% to $1.21 billion, attributable primarily to lower volume and unfavorable foreign currency translation and partially offset by improved price/mix.
Mr. Kramer noted that industry conditions were softer than we anticipated in Europe and we continued to see an adverse impact from lack of alignment in our distribution channels. In response, we expect to accelerate our plans to rationalize distribution in the region. These actions, which will begin early next year, should improve the focus on our brands and ensure that we capture the full benefits of the investments we are making to increase the supply of premium, high margin tires over the next few years," said Kramer.
Asia Pacific recorded a 3.2% rise in revenue to $548 million, reflecting higher volume and improved price/mix, Goodyear said. Tire unit volume increased 5%, driven by growth in China, which Mr. Kramer attributed in part to the launch of several new OE fitments there that helped mitigate the impact of lower auto production.