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Goodyear Reports Q2, First Half 2020 Results

Goodyear’s second-quarter 2020 sales were $2.1 billion, down 41% from a year ago. PHOTO Goodyear

The Goodyear Tire & Rubber Company today reported results for the second quarter and first half of 2020.

“Although our first-half results were greatly affected by difficult industry conditions as a result of the ongoing COVID-19 pandemic, the decisive actions we took to safeguard our business helped mitigate the impact on our results,” said Richard J. Kramer, chairman, chief executive officer, and president.

“While we are encouraged to see industry demand gradually recovering in most major markets, our plans for the second half consider the challenges and uncertainties that remain.

We continue to focus on the wellbeing of our associates, servicing our customers and supporting our brands while appropriately managing our costs and working capital,” added Kramer.

“We are also committed to supporting the strong growth we are seeing in our e-commerce and mobile installation businesses.

These investments in distribution will strengthen our leadership position and support our long-term growth prospects as consumer buying behavior continues to evolve within the tire industry,” said Kramer.

Goodyear’s second-quarter 2020 sales were $2.1 billion, down 41% from a year ago. The decline was driven by lower industry volume and reduced sales from other tire-related businesses. These factors were partially offset by improvements in price/mix.

Tire unit volumes totaled 20.4 million, down 45% from the prior year’s period. Industry demand during the second quarter was significantly affected by the actions governments, businesses and consumers took to slow the spread of COVID-19, with the greatest impact occurring in April and May.

Replacement tire shipments declined 39%, reflecting the impact of lower consumer demand, temporary store closings, and wholesale and retail customers reducing inventory levels.

Original equipment unit volume decreased 62%, driven by reduced vehicle production, including the effects of global auto manufacturers temporarily suspending vehicle production.

Goodyear’s second-quarter 2020 net loss was $696 million ($2.97 per share) compared to net income of $54 million (23 cents per share) a year ago. The decrease was driven by a decline in segment operating income, a non-cash asset impairment charge, and higher rationalization charges.

Second-quarter 2020 adjusted net loss was $437 million ($1.87 per share), compared to an adjusted net income of $58 million (25 cents per share) in 2019. Per-share amounts are diluted.

The company reported a segment operating loss of $431 million in the second quarter of 2020, down $650 million from a year ago.

The decline primarily reflects lower volume and reduced factory utilization. These factors were partially offset by lower SAG, driven by reductions in payroll and advertising expenses relating to actions taken as a result of the COVID-19 pandemic.

Year-to-Date Results

Goodyear’s sales for the first six months of 2020 were $5.2 billion, a 28% decline from the 2019 period, primarily due to lower volume and reduced sales from other tire-related businesses. These factors were partially offset by improvements in price/mix.

Tire unit volumes totaled 51.7 million, down 31% from 2019. Replacement tire shipments decreased 28%, reflecting lower industry demand. Original equipment volume declined 41%, driven by lower global vehicle production.

Goodyear’s net loss was $1.3 billion for the first six months of 2020 ($5.62 per share) compared to a net loss of $7 million (3 cents per share) in the prior year’s period.

The first half of 2020 included several significant items, 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 asset impairment charge of $148 million to reduce the carrying value of an equity interest in TireHub.

There are also some rationalization charges of $108 million, primarily associated with the previously announced plan to permanently close a manufacturing facility in Gadsden, Alabama.

Goodyear’s net income for the comparable period in 2019 included rationalization charges of $107 million, primarily related to a plan to modernize two tire manufacturing facilities in Germany.

Goodyear’s adjusted net loss for the first six months was $575 million ($2.46 per share), compared to adjusted net income of $103 million (44 cents per share) in the prior year’s period. Per-share amounts are diluted.

The company reported a segment operating loss of $478 million for the first six months of 2020, down $887 million from a year ago. The decrease was primarily due to lower volume and reduced factory utilization. These factors were partially offset by lower SAG, driven by reductions in payroll and advertising expenses.

Americas’ second-quarter 2020 sales of $1,134 million were 42% lower than in the previous year, driven by lower volume and reduced sales from other tire-related businesses. These factors were partially offset by improvements in price/mix. Tire unit volume declined by 50%.

Replacement tire shipments decreased 45%, driven by weak industry demand and the impact of a significant consumer replacement customer temporarily closing its auto care facilities. Original equipment unit volume declined 68%, reflecting lower vehicle production.

Second-quarter 2020 operating loss of $287 million was down $421 million from the prior year’s quarter. The decline was driven by reduced factory utilization, reflecting lower sales and reductions in inventory, and lower unit volume.

These factors were partially offset by lower SAG, driven by reductions in payroll and advertising expenses.

For more information about the results, you can read the full report here.

 

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