Although sales were up, Goodyear Tire & Rubber Co.’s year-over-year earnings dropped 72 percent in 2017 and segment operating income fell 23 percent.
The company attributed a net loss in 2017’s fourth quarter to tax reform. Sales were $15.4 billion in 2017, up 1percent from the prior year’s sales of $15.2 billion.
Overall tire unit volumes dropped 4 percent to 159.2 million. Replacement tire shipments were down 3 percent, and original equipment unit volume was down 6 percent.
The company says sales in 2017 reflect an increase in price/mix, favorable foreign currency translation and higher sales in other tire-related businesses, which were partially offset by lower volume.
Goodyear reported net income of $346 million, down 72 percent from $1.3 billion a year ago. Goodyear’s income-to-sales ratio in 2017 was 2.2 percent.
The company attributed the drop in earnings to increased income tax expense, which was primarily due to the recognition of a one-time, non-cash tax charge related to U.S. tax reform in 2017, and lower segment operating income. In addition, the company says it recognized discrete tax benefits in 2016, primarily due to the release of foreign valuation allowances.
Full-year adjusted earnings per share for 2017 was $3.12, compared to $4.00 a year ago.
The company reported 2017 segment operating income of $1.5 billion in 2017, down 23 percent from $2 billion a year ago. The decrease was primarily due to increased raw material costs and the effect of lower volume, which were partially offset by price/mix improvements.
Fourth quarter results
Goodyear’s fourth quarter 2017 sales were $4.1 billion, up 9 percent from $3.7 billion a year ago. The increase was driven by improved price/mix, favorable currency translation and volume. Excluding currency translation, global revenue per tire increased 5 percent.
Tire unit volumes totaled 42 million, up 2 percent from 2016. Replacement tire shipments were up 3 percent. Original equipment unit volume was down 1 percent.
Goodyear reported a net loss of $96 million in the fourth quarter of 2017 compared to net income of $561 million in the year-ago quarter. The fourth quarter loss was driven by a $299 million one-time, non-cash tax charge related to U.S. tax reform.
In addition, the company recognized discrete tax benefits of $331 million in 2016 primarily due to the release of foreign valuation allowances. Fourth quarter 2017 adjusted earnings per share was 99 cents, compared to 95 cents in 2016. Per share amounts are diluted.
The company reported fourth quarter segment operating income of $419 million in 2017, down from $479 million a year ago. The decrease reflects higher raw material costs and the unfavorable impact of lower production on cost, which were partially offset by improved price/mix, net cost savings and higher volume.