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Goodyear Reports $2M Net Loss, Sales Down 9% in Q3

The Goodyear Tire & Rubber Company’s third quarter 2020 net loss was $2 million, compared to net income of $88 million a year ago. The company says the decrease was driven by a decline in segment operating income. Third-quarter 2020 adjusted net income was $24 million, compared to adjusted net income of $105 million in 2019.

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Goodyear’s third quarter 2020 sales were $3.5 billion, down 9% from a year ago. The decline was driven by lower volume, unfavorable foreign currency translation and reduced sales from other tire-related businesses. These factors were partially offset by improvements in price/mix, Goodyear says.

Tire unit volumes totaled 36.6 million, down 9% from the prior year’s period. Industry demand during the quarter was affected by the continued economic disruption resulting from the COVID-19 pandemic. Replacement tire shipments declined 9%, reflecting the impact of lower consumer demand, temporary third-party retail store closings in the U.S., and actions taken to align European distribution, Goodyear says. Original equipment unit volume decreased 9%, driven by reduced vehicle production.

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The company reported segment operating income of $162 million in the third quarter of 2020, down $132 million from a year ago. The decline primarily reflects lower volume, reduced factory utilization and lower earnings from other tire-related businesses, Goodyear says, adding these factors were partially offset by the benefits of cost-saving actions, including ongoing rationalization plans, and improved price/mix.

“Our results reflect increasing momentum as the global tire industry recovered more quickly than we expected during the quarter, led by the Americas,” said Richard J. Kramer, chairman, chief executive officer and president. “We are taking every opportunity to continue building our business for the long term, while generating significant cost savings and free cash flow.”

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Goodyear’s sales for the first nine months of 2020 were $8.7 billion, a 21% decline from the 2019 period, driven by lower volume, reduced sales from other tire-related businesses and unfavorable foreign currency translation, the company says. These factors were partially offset by improvements in price/mix.

Tire unit volumes totaled 88.3 million, down 24% from 2019. Replacement tire shipments decreased 21%, primarily reflecting lower industry demand. Original equipment volume declined 31%, driven by lower global vehicle production.

Goodyear’s net loss was $1.3 billion for the first nine months of 2020 compared to net income of $81 million in the prior year’s period. The first nine months of 2020 included several significant items, Goodyear says, including a non-cash charge of $295 million related to a valuation allowance on certain deferred tax assets for foreign tax credits, a non-cash impairment charge of $182 million to reduce the carrying value of goodwill in the EMEA business, a non-cash impairment charge of $148 million to reduce the carrying value of an equity interest in TireHub, and rationalization charges of $133 million, primarily associated with the closure of a manufacturing facility in Gadsden, Alabama. Goodyear’s net income for the comparable period in 2019 included rationalization charges of $128 million, primarily related to a plan to modernize two tire manufacturing facilities in Germany. Goodyear’s adjusted net loss for the first nine months of 2020 was $550 million, compared to adjusted net income of $208 million in the prior year’s period.

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The company reported a segment operating loss of $316 million for the first nine months of 2020, down $1.0 billion from a year ago. The decrease was primarily due to lower volume, reduced factory utilization and lower earnings from other tire-related businesses, Goodyear says, adding these factors were partially offset by lower SAG, driven by reduced payroll and advertising expenses, and the benefits of cost-saving actions, including ongoing rationalization plans.

Americas’ third quarter 2020 sales of $1.8 billion were 11% lower than in the previous year, driven by lower volume, unfavorable foreign currency translation and reduced sales from other tire-related businesses, the company says. These factors were partially offset by improvements in price/mix. Tire unit volume declined 10%. Replacement tire shipments decreased 12%, reflecting weak retail demand and temporary third-party retail store closings in the U.S. Original equipment unit volume was essentially flat, as the impact of weak industry demand in Brazil offset a 7% increase in U.S. consumer OE shipments, Goodyear says.

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