Goodyear Tire & Rubber Co. took a net loss of $291 million during the fourth quarter of 2023 versus a loss of $104 million during the same period in 2022.
The Akron, Ohio-based tiremaker’s fourth quarter 2023 sales decreased 4.8% “compared to prior year, driven by the impact of lower replacement volume and lower third-party chemical sales,” according to Goodyear officials.
The company’s total tire unit volume during the quarter totaled 45.4 million units, down 3.8% on a year-over-year basis.
Goodyear’s global replacement tire volume fell by 6.7%, which officials say reflects continued “weak trends” in its Europe, Middle East and Africa (EMEA) region.
“Global OE volume increased 6%, driven by share gains in Asia Pacific.”
However, after adjusting for “significant items,” Goodyear reported fourth quarter 2023 net income of $135 million” versus net income of $20 million during the last quarter of 2022.
“Significant items included $35 million in ‘corporate other’ expenses related to” the company’s Goodyear Forward plan, “which includes advisory, legal and consulting fees and costs associated with planned asset sales” of Goodyear’s chemical division, its OTR tire business and the Dunlop brand.
Segment operating income
Goodyear’s reported fourth quarter 2023 segment operating income was $383 million, up $147 million versus the same period in 2022.
“The impact of lower volume was $103 million, including $57 million from lower sales volume and $46 million from lower production during the third quarter to align with industry demand,” which Goodyear says was down 4.8 million units versus the fourth quarter of 2022.
“Results included net price/mix versus raw materials of $249 million,” the company’s highest since the fourth quarter of 2012.
“Raw material cost decreases of $329 million more than off-set price/mix,” according to Goodyear officials, who add that lower price/mix “reflects continued mix declines related to commercial truck tire industry weakness and the effect of contractual raw material price adjustment with OE and fleet customers.”
Americas performance
Net sales in Goodyear’s Americas region totaled $3.1 billion, a $333 million drop from the fourth quarter of 2022.
“The decline in sales was driven by 8.8% lower volume,” including a 12% commercial truck tire volume decrease.
Goodyear’s overall replacement tire volume in the Americas was 8.9% lower than fourth quarter 2022 levels, while the company’s OE replacement tire volume in the Americas fell by 8.6%.
“The decrease in replacement volume reflects a strong comparable in the U.S. consumer tire market, industry destocking in Latin America and continued commercial weakness. The OE result primarily reflects UAW (United Auto Workers) strike-related impacts during the quarter and weaker commercial truck build rates.”
Segment operating income in Goodyear’s Americas region increased by $30 million from fourth quarter 2022 levels to $309 million, reflecting “the impact of lower volume,” which includes $63 million in lower sale volume and $20 million “in unabsorbed overhead from lower production” during the third quarter of 2023.
Lower price/mix in the region “includes the impact of contractual raw material price adjustments with our OE and fleet customers and continued weakness in the commercial truck tire industry,” while “consumer replacement pricing was stable.”
Goodyear officials say that the Americas region achieved its best quarterly operating margin (10.1%) since 2021.
“While our U.S. volume has seen a significant amount of volatility since 2020, our overall consumer replacement share is in line with our strategy to focus on profitable growth.”
Commenting on sellout activity, Goodyear officials said that “U.S. industry retail sales to end consumers were down slightly compared to the prior year. Goodyear sellout volumes were in-line with the industry.”
At the end of 2023, Goodyear’s U.S. consumer replacement channel inventories had decreased by 5% on a year-over-year basis.
Other regions
Net sales in Goodyear’s EMEA region totaled $1.4 billion during the fourth quarter of 2023, a 2.6% gain year-over-year.
“The increase in sales was driven by 2% higher revenue per tire, excluding mix and foreign currency, partly off-set by lower unit volumes,” according to Goodyear officials.
Results also reflect continued destocking in the consumer replacement tire channel.
Goodyear’s consumer replacement volume in EMEA declined on a year-over-year basis by 5%.
Segment operating income in EMEA totaled $6 million versus a loss of $80 million one year ago, driven by raw material cost decreases and other factors, which were off-set partially by the impact of lower volume, unabsorbed overhead and other factors.
A fire at Goodyear’s Debica, Poland, factory also impacted EMEA segment operating income.
Goodyear’s overall tire volume in EMEA was down 3.7% year-over-year, with replacement tire volume falling by 5.8%.
“Industry growth in the fourth quarter was driven by low-end imports. Goodyear’s consumer replacement volume result was more in line with that of other domestic European producers.”
Net sales in Goodyear’s Asia Pacific region totaled $650 million, a 6.6% increase over the fourth quarter of 2022. “This result reflects a 10% increase in tire volume, partly off-set by 1% lower revenue per tire.”
The company achieved segment operating income of $68 million in Asia Pacific during the fourth quarter of 2023, a year-over-year increase of $31 million.
Goodyear’s overall tire volume in Asia Pacific was up 900,000 units, a 10% increase from 2022 levels. Replacement tire volume increased by .7%, while OE tire volume grew by 22.3%.
“Replacement volume followed industry trends, while the OE result reflects the ramp-up of new EV fitments during the quarter,” say Goodyear officials.
2024 forecast
During the first three months of 2024, Goodyear expects global tire unit volumes to drop by 2%, driven by the replacement channel.
“The impact of inflation and other costs is expected to be approximately $25 million compared to the first quarter of 2023. This includes general inflation of approximately 3%, partly off-set by lower transportation rates.”
Goodyear expects to benefit from lower year-over-year raw material costs during the first quarter of 2024.
For the full year, the tiremaker expects the Goodyear Forward program to benefit segment operating income by “approximately $350 million.
“The Goodyear Forward program includes specific actions to deliver annualized cost reductions of $1 billion by the fourth quarter of 2025, ensuring we remain competitive and positioned as a leader in our industry. These cost reduction initiatives are underway.”
Goodyear officials add that “processes centered around three of our assets” - the company’s OTR tire business, its chemical business and Goodyear’s Dunlop brand - also “are underway, with the expectation to deliver gross proceeds in excess of $2 billion."
