AKRON — Goodyear reported its best first quarter in three years thanks to an increase in tire demand around the globe.
The Akron-based company's first quarter segment operating income of $226 million was the strongest first quarter since 2018, the company said. In the first quarter, Goodyear had a net income of $12 million and adjusted net income of $102 million.
"We delivered impressive segment operating income, which was significantly above first quarter 2020 results and also nearly 20% higher than first quarter 2019 despite sales volumes not yet having fully recovered to pre-COVID levels," Richard J. Kramer, chairman, chief executive officer and president of Goodyear, said. "We achieved these results despite the impact of a severe winter storm in the U.S. and industry supply chain challenges during the quarter."
Goodyear's first quarter sales were $3.5 billion, up 15% from a year ago. The increase was driven by higher volume, improvements in price/mix and favorable foreign currency translation, the company said.
Driven by large-rim diameter segment demand, global consumer replacement volume significantly exceeded industry estimates, the company said.
"Our consumer replacement business delivered outstanding results," Mr. Kramer said. "By leveraging improved distribution and new products, we outperformed the industry while expanding margins. At the same time, we also continued to build our OE business, where we are benefiting from our leading technical capabilities and emerging mobility trends."
Tire unit volumes totaled 35 million, up 12% from the prior year's period.
Replacement tire volume increased 14%, reflecting both continuing industry recovery and market share gains, the company said.
Original equipment unit volume increased 5%, driven by higher vehicle production in Asia Pacific and increased market share in EMEA.
Goodyear's first quarter 2021 net income was $12 million (5 cents per share) compared to a net loss of $619 million ($2.65 per share) a year ago. The 2021 period included several significant items, including, on a pre-tax basis, rationalization charges of $50 million primarily associated with a plan to reduce selling, administrative and general expense in EMEA and the modernization of two manufacturing facilities in Germany, and a negative impact of $23 million related to a severe winter storm in the U.S.
Goodyear's first quarter 2020 net loss included a charge of $295 million related to a valuation allowance on certain deferred tax assets for foreign tax credits and, on a pre-tax basis, a non-cash impairment charge of $182 million to reduce the carrying value of goodwill in its Europe, Middle East and Africa (EMEA) business unit.
First quarter 2021 adjusted net income was $102 million (43 cents per share) compared to an adjusted net loss of $140 million (60 cents per share) in 2020. Per share amounts are diluted.
The company reported segment operating income of $226 million in the first quarter of 2021, up $273 million from a year ago. The increase primarily reflects the impacts of higher volume, including increased factory utilization, improvements in price/mix, the benefits of cost saving actions, including ongoing rationalization plans, and lower raw material costs.