The Goodyear Tire & Rubber Company reported results for the first quarter of 2023 in an investor letter published on its investor relations website.
The company said its first-quarter results were significantly impacted by weak industry volumes and inflation and it expects to work through continuing cost inflation and contractionary demand in many of its markets in the first half of 2023. Even so, the company is anticipating relative stability in industry demand during the third quarter and the resumption of year-over-year growth in the fourth quarter, given significant declines in the comparable period. At the same time, it said it should benefit from decreases in raw material costs and moderation in inflation.
Even in this relatively low-demand environment and with the full benefits of the Cooper Tire synergies, Goodyear said it expects to achieve a second-half segment operating margin that should bring it closer to its near-term target of 8%.
Goodyear said its value proposition remains strong in the US consumer replacement industry and supply continues to be tight for premium, high-value-added products – especially for light truck and SUV tires. This is especially true given the acceleration of consumer OE production, where Goodyear said it is winning a high share of new fitments. At the same time, the company said demand for travel is robust, with US miles driven up 4% year-to-date and slightly ahead of 2019 levels. With the completion of the Cooper Tire integration and the outlook for favorable raw material costs, Goodyear anticipates strong earnings growth and significant margin expansion in the second half of this year.
“Our people and our culture are the fabric of our company, and I’m tremendously proud of how our team has acted with agility to serve our customers and to address unparalleled demand volatility and inflation over the last three years,” Richard Kramer, chairman, chief executive officer and president, Goodyear, said. “As I think about the path ahead, and despite the macroeconomic uncertainty that surrounds us today, I am confident in Goodyear’s future. Building on our strong history of leadership, we will continue to drive innovation in our industry and lay the foundation for the next 125 years.”
