Goodyear Tire reported results for the first quarter of 2021 with sales up 15% from a year ago at $3.5 billion.
The increase was driven by higher volume, improvements in price/mix and favourable foreign currency translation.
“We delivered impressive segment operating income, which was significantly above first-quarter 2020 results and also nearly 20% higher than first -quarter 2019 despite sales volumes not yet having fully recovered to pre-COVID levels,” said Richard J. Kramer, Chairman, Chief Executive Officer and President.
Tire unit volumes totaled 35.0 million, up 12% from the prior year’s period.
The impact of the COVID-19 pandemic on industry demand moderated relative to the prior year. Replacement tire volume increased 14%, reflecting both continuing industry recovery and market share gains.
Original equipment unit volume increased 5%, driven by higher vehicle production in Asia Pacific and increased market share in EMEA.
Goodyear’s first-quarter 2021 net income was $12 million (5 cents per-share) compared to a net loss of $619 million ($2.65 per-share) a year ago.
The 2021 period included several significant items, including, on a pre-tax basis, rationalization charges of $50 million primarily associated with a plan to reduce selling, administrative and general expense in EMEA and the modernization of two manufacturing facilities in Germany, and a negative impact of $23 million related to a severe winter storm in the U.S.
Goodyear’s first-quarter 2020 net loss included a charge of $295 million related to a valuation allowance on certain deferred tax assets for foreign tax credits and, on a pre-tax basis, a non-cash impairment charge of $182 million to reduce the carrying value of goodwill in its EMEA business unit.
The first-quarter 2021 adjusted net income was $102 million (43 cents per-share) compared to an adjusted net loss of $140 million (60 cents per- share) in 2020. Per-share amounts are diluted.
The company reported a segment operating income of $226 million in the first-quarter of 2021, up to $273 million from a year ago.
The increase primarily reflects the impacts of higher volume, including increased factory utilization, improvements in price/mix, the benefits of cost saving actions, including ongoing rationalization plans, and lower raw material costs.
- Americas’ first-quarter 2021 sales of $1.8 billion were 7% higher than in 2020, driven by higher volume and improvements in price/mix. These factors were partially offset by unfavourable foreign currency translation.
- Tire unit volume increased 7%.
- Replacement tire volume increased 11%, reflecting stronger industry demand and U.S. consumer and commercial replacement market share gains.
- Original equipment unit volume decreased 6%, reflecting lower industry demand, partially offset by consumer share gains in Latin America.
- The first-quarter 2021 segment operating income was $114 million compared to breakeven in the prior year’s quarter.
The increase was driven by improvements in price/mix, the impacts of higher volume, including increased factory utilization, and the benefits of cost- saving actions, including ongoing rationalization plans.
These factors were partially offset by higher raw material costs. We estimate a severe winter storm in the U.S. negatively impacted segment operating income by approximately $17 million.