Goodyear posts strong 2021 Q1 results

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.

In North America, first quarter 2021 sales of $1.8 billion were 7% higher than in 2020. These factors were partially offset by unfavorable foreign currency translation, the company said.

Tire unit volume increased 7%. Replacement tire volume increased 11%, reflecting stronger industry demand and U.S. consumer and commercial replacement market share gains, the company said.

OE unit volume decreased 6%, reflecting lower industry demand, partially offset by consumer share gains in Latin America.

First quarter 2021 segment operating income was $114 million compared to break-even in the prior year's quarter. The increase was driven by improvements in price/mix, the impacts of higher volume, including increased factory utilization, and the benefits of cost saving actions, including ongoing rationalization plans.

These factors were partially offset by higher raw material costs, the company said.

"We estimate a severe winter storm in the U.S. negatively impacted segment operating income by approximately $17 million," Goodyear said in a statement.

EMEA's first quarter 2021 sales increased 24% from last year to $1.2 billion. Tire unit volume increased 10%. Replacement tire volume rose 11%.

OE unit volume increased 6%, reflecting significant share gains driven by new consumer fitments and the addition of new fleet customers.

First quarter 2021 segment operating income of $74 million was up $127 million from the prior year's quarter, driven by the impacts of higher volume, including increased factory utilization, improvements in price/mix and lower raw material costs, the company said.

Asia Pacific's first quarter 2021 sales increased 27% to $493 million, driven by higher volume and favorable foreign currency translation, the company said. Tire unit volume increased 29%. Replacement tire volume increased 31%, reflecting a record first quarter performance. OE unit volume increased 26%, driven by a recovery in vehicle production in China.

First quarter 2021 segment operating income of $38 million was up $32 million from the prior year's quarter. The increase was driven by the impacts of higher volume, including improved factory utilization, the company said.

"I'd like to acknowledge and thank all of our associates for continuing to manage through personal and professional challenges to deliver for our customers and communities," Mr. Kramer said.