Goodyear Projects Confidence in TireHub in Q1 Earnings Report

Goodyear Projects Confidence in TireHub in Q1 Earnings Report

Goodyear has announced it's 1Q 2018 earnings and provided a bit more insight into the TireHub joint venture with Bridgestone.

In a conference call with investors, Goodyear Tire & Rubber Company President and CEO Richard Kramer and Executive Vice President and Chief Financial Officer Laura Thompson, presented the company’s earnings statement for the first quarter and addressed questions about TireHub, the company’s recently announced distribution partnership with Bridgestone Americas.

The earnings call showed that Goodyear had a profit of $75 million in the first quarter, which was up 4% from a year ago despite volume dropping by 39 million units, or about a 2.5% decrease. The company reported $127 million operating income and 6.6% operating margin for the Americas segment. Overall adjusted net income for the quarter was $122 million, or about $.74 per share.

The impact of the TireHub deal was on the minds of investors, and many of the questions Kramer and Thompson fielded pertained to the impact that the newly announced partnership would have on Goodyear’s operations, as well as on the broader industry. Thompson said the company expects TireHub should be fully up and running in June, pending government oversight of the deal.

In conjunction with this transaction, the company expects to transition volume representing approximately 10 million units of annual sales – primarily to TireHub, but to other aligned distributors as well – beginning during the second quarter of 2018. Given the temporary disruption associated with the start-up of TireHub, the company expects a near-term reduction in volume of up to 1.5 million units in 2018.

A major element of that volume reduction results from news that Goodyear would no longer partner with American Tire Distributors.

Kramer cited the strength of the Goodyear brand and consumer-facing sales, as well as the importance that an eventual increase in volume would play in the company’s plans.

“The whole essence of [TireHub] is driving growth and, as our strategy roadmap says, driving sustainable revenue and profit growth and that’s exactly what this does and as we get closer to the consumer. Our ability to drive volume and our ability to drive a positive price mix is exactly the essence of what we’re trying to do is we think about the business going forward.”

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