Goodyear Reports Fourth Quarter, 2019 Full-year Financials

• Full-year cash flow from operations of $1.2 billion, up 32% year over year, reflecting improved working capital performance   
• U.S. consumer replacement volume increased 4% in 2019, driven by strong growth in the premium, large-rim diameter segment
• Fourth quarter global replacement volume growth outpaced the industry
• Growth in global commercial truck tyre shipments exceeded industry in 2019

The Goodyear Tire & Rubber Company reported results for the fourth quarter and full-year of 2019.

“In the U.S., market conditions remained largely stable and our consumer and commercial replacement businesses delivered strong performances this year, as they benefited from the strength of our brand, new product introductions, and the steps we have taken to align our distribution,” said Richard J. Kramer, chairman, chief executive officer and president. “We also delivered solid consumer replacement growth in both China and Brazil during the second half of the year,” he added.

 “We continue to face a challenging global environment, including recessionary demand trends in many international markets. To address these challenges, we remain focused on further improving our cost structure and working capital management, while continuing to build our capabilities to enable mobility, today and in the future,” said Kramer.

Goodyear’s fourth quarter 2019 sales were $3.7 billion, down 4% from a year ago, driven primarily by lower industry volume and unfavourable foreign currency exchange rates, partially offset by improved price and mix.

Tyre unit volumes totalled 39.6 million, down 2% from 2018. Original equipment unit volume decreased 10%, driven by lower global vehicle production. Replacement tyre shipments increased slightly.

Goodyear’s fourth quarter 2019 net loss was $392 million ($1.68 per share) compared to net income of $110 million ($0.47 per share) a year ago. The decrease was driven by discrete tax adjustments of $380 million during the fourth quarter of 2019, including a non-cash charge of $334 million related to an acceleration of royalty income in the U.S. from the sale of the next twelve years of European royalty payments to its Luxembourg business, and rationalisation charges of $77 million. Fourth quarter 2019 adjusted net income was $45 million (19 cents per share), compared to $120 million (51 cents per share) in 2018. Per share amounts were diluted.

The company reported segment operating income of $242 million in the fourth quarter of 2019, down from $307 million a year ago. The decline primarily reflected a decrease in favourable indirect tax settlements in Brazil, lower factory utilisation and lower volumes.

Full-Year Results

Goodyear’s 2019 net sales were $14.7 billion, a 5% decrease from the prior year due to unfavourable foreign currency exchange rates, lower volumes and reduced third-party chemical sales. These factors were partially offset by improved price and mix.

Tyre unit volumes totalled 155.3 million, down 2% from 2018. Original equipment volume decreased 8%, primarily due to lower global vehicle production. Replacement tyre shipments were essentially unchanged.

Goodyear’s 2019 net loss was $311 million ($1.33 per share) compared to a net income of $693 million ($2.89 per share) in the prior year. The 2019 period included several significant items, most notably discrete tax adjustments of $386 million and rationalisation charges of $205 million, primarily related to the previously announced plan to modernise two tyre manufacturing facilities in Germany and a plan to curtail production of tyres for declining, less profitable segments of the tyre market at the Gadsden, Alabama, manufacturing facility. Goodyear’s 2018 net income included a net gain of $272 million resulting from the TyreHub transaction, net of transaction costs. Full-year 2019 adjusted net income was $253 million ($1.08 per share) compared to $555 million ($2.32 per share) in the prior year. Per share amounts were diluted.

The company reported segment operating income of $945 million in 2019, down from $1,274 million a year ago. The decrease primarily reflected higher raw material costs, lower volumes, a decrease in favourable indirect tax settlements in Brazil and unfavourable foreign currency exchange rates, which were partially offset by improved price and mix.

Reconciliation of Non-GAAP Financial Measures

See the note at the end of this release for further explanation and reconciliation tables for Segment Operating Income and Margin; Adjusted Net Income; and Adjusted Diluted Earnings per Share, reflecting the impact of certain significant items on the 2019 and 2018 periods.

Business Segment Results

Americas

Europe, Middle East and Africa

Asia Pacific

Disruption of Operations in China

As is the case with many other companies, Goodyear’s operations in China have been disrupted by the coronavirus. The company’s office-based associates will continue to work remotely until at least Feb. 17. Following a nine-day closure, the Goodyear-Pulandian manufacturing plant restarted operations on a limited basis on Feb. 10 to support customers across the Asia Pacific region. It is not clear what the full impact of the coronavirus disruption will be.

AndGo

At the 2020 Consumer Electronics Show, Goodyear unveiled AndGo, a digital vehicle servicing platform that combines predictive software and a trusted, national service network to enable consumer fleets to be ready to go whenever they are needed.

Source: Goodyear