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Goodyear Sees Slight Drop in Sales in Q4, Advantages of TireHub Deal in Full-Year Results

In the fourth quarter of 2018, Goodyear saw a drop in sales and segment operating income. While Goodyear’s net income before tax received a boost from the TireHub transaction, its net income after tax dropped this year.

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The Goodyear Tire & Rubber Co. reported results for the fourth quarter and full-year of 2018.

Highlights from Goodyear’s fourth quarter included:

  • Revenue per tire up 1% (excluding foreign exchange),
  • A positive price mix;
  • U.S. retail sell-out volume up 2% for the quarter;
  • The successful launch of Goodyear’s Roll retail pilot plus the continued expansion of its Mobile Tire Shop network;
  • And a 5% drop in sales compared to a year ago as well as a drop in segment operating income.

“Our teams delivered several operational wins in 2018, including increasing our consumer replacement volume and building our OE pipeline by securing numerous fitments, notably on future electric vehicles,” said Richard J. Kramer, chairman, chief executive officer and president. “These achievements are a testament to our product innovation, the strength of our distribution network and the value of the Goodyear brand.”

“Additionally, we achieved a number of strategic objectives throughout the year that strengthen our connected business model and move us closer to our customers, allowing us to improve our service levels and positioning us to be a leader in the changing mobility landscape. While many of the macro challenges we faced in 2018 have extended into 2019, we continue to build on what we accomplished last year and remain focused on delivering a higher level of earnings over the longer term.”

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Goodyear’s fourth quarter 2018 sales were $3.9 billion, down 5%from $4.1 billion a year ago, driven by unfavorable currency translation and lower volume. These effects were partially offset by improvements in price/mix.

Tire unit volumes totaled 40.7 million, down 3% from 42.0 million a year ago. Replacement tire shipments were nearly flat compared with a year ago, as growth in Europe was offset by weakness in Brazil and China. Original equipment unit volume was down 10%, primarily due to lower automotive production in China and India. Goodyear’s net income was $110 million ($0.47 per share) in the fourth quarter of 2018 compared to a net loss of $96 million ($0.39 per share) a year ago. Fourth quarter 2018 adjusted net income was $120 million ($0.51 per share) compared to $245 million ($0.99 per share) in 2017. Per share amounts are diluted.

The company reported fourth quarter segment operating income of $307 million in 2018, down from $430 million a year ago. The decrease reflects higher raw material costs, weaker results from other tire-related businesses, lower volume and the unfavorable impact of foreign currency translation, which were partially offset by improved price/mix, net cost savings and improved overhead absorption.

Full-Year Results

Goodyear’s 2018 sales were $15.5 billion, up 1% from the prior year, driven by improvements in price/mix, partially offset by unfavorable foreign currency translation. Tire unit volumes totaled 159.2 million, unchanged from the prior year. Replacement tire shipments were up 1%. Original equipment unit volume was down 4%. Goodyear’s 2018 net income of $693 million ($2.89 per share) was up from $346 million ($1.37 per share) in 2017.

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Goodyear’s net income in 2018 included a net gain after-tax and minority interest of $207 million resulting from the TireHub transaction, net of transaction costs. Goodyear’s net income in 2017 included net charges after minority interest of $292 million resulting from net discrete tax items. Full-year 2018 adjusted net income was $555 million ($2.32 per share), down from $790 million ($3.12 per share) a year ago. The company reported 2018 segment operating income of $1.3 billion in 2018, down 18 percent from $1.6 billion a year ago. The decrease was primarily attributable to increased raw material costs, weaker results from other tire-related businesses and unfavorable foreign currency translation, which were partially offset by net cost savings and improved overhead absorption.

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