Goodyear Reports Q1 Results

“In addition, we took steps to increase our long-term competitiveness. The plans we announced to modernise our Hanau and Fulda manufacturing facilities in Germany will improve our supply of cost-effective premium tyres in Europe, helping us achieve our goal of having the right tyre, at the right place, at the right time, at the right cost,” added Kramer.

Goodyear’s first quarter 2019 sales were US$3.6 billion, down six per cent from US$3.8 billion a year ago, driven by unfavourable currency translation and lower volume in its international businesses, partially offset by improvements in price/mix.

Tyre unit volumes totalled 38.0 million, down three percent from 39.0 million in the year ago quarter.

Original equipment unit volume declined seven per cent, primarily reflecting weaker U.S volumes and lower automotive production in China and India. Replacement tyre shipments were down less than one per cent compared with a year ago.

Goodyear’s net loss was US$61 million in the first quarter of 2019 compared to net income of US$75 million in the year-ago quarter.

The first quarter of 2019 included several significant items, most notably US$93 million in charges related to the previously announced plan to modernise two tyre manufacturing facilities in Germany. First quarter 2019 adjusted net income was US$45 million compared to US$122 million in 2018.

The company reported first quarter segment operating income of US$190 million in 2019, down from US$281 million a year ago. The decrease reflects higher raw material costs, lower volume, unfavourable foreign currency translation, and weaker results from other tyre-related businesses, partially offset by favourable price-mix, improved overhead absorption and net cost savings.

Business Segment Results - Asia Pacific

Asia Pacific’s first quarter 2019 sales decreased 12 per cent from last year to $US501 million, reflecting weaker volume and the negative effect of foreign currency translation, partially offset by improved price/mix.

Tyre unit volumes declined nine per cent from last year’s first quarter. Original equipment unit volume was down 15 per cent, reflecting weak vehicle production in China and India. Replacement tyre shipments declined four per cent, primarily in China.

First quarter 2019 operating income of US$47 million was down 28 per cent from last year, reflecting the impacts of lower volume and higher raw material costs.

German Modernisation and Restructuring

During the first quarter, Goodyear announced plans to invest approximately US$122 million to modernise its manufacturing facilities in Hanau and Fulda (Germany), as part of its strategy to strengthen the competitiveness of its global manufacturing footprint and increase its strategy of premium, large-rim-diameter consumer tyres.

The transformation will result in these manufacturing facilities having more automated production and being fully capable of producing consumer tyres with rim diameters greater than or equal to 17 inches, better positioning the company to meet the growing demand for higher margin, premium tyres in Europe.

The Company anticipates that required changes to the layout of the plants, efficiency gains from the new equipment and the decision to curtail production of tyres for the declining, less profitable segments of the tyre market will result in approximately 1,100 job reductions. These actions will increase the productivity of both plants and the resulting conversion savings are expected to improve Europe, Middle East and Africa’s segment operating income by US$60 to $70 million on an annualised basis over a three-year period beginning in 2020. The plan remains subject to consultation with relevant employee representative bodies.

Source: https://corporate.goodyear.com/en-US/media/news/goodyear-reports-first-quarter-2019-results.html