Goodyear reports $208 million overall net loss in Q2 2023

The Goodyear Tire & Rubber Company has reported a second quarter 2023 net loss of $208 million compared to net income of $166 million a year ago. According to executives, the sharp drop was primarily due to lower sales volume and higher “other expense”, driven by lower net gains on asset sales and higher pension costs.

The losses come off the back of second quarter sales of $4.867 billion, down 6.6 per cent compared the same point in 2022. However, revenue per tyre increased 6 per cent excluding the impact of foreign exchange. Tyre unit volume in the quarter totalled 40.8 million units, down 10.7 per cent from prior year levels.

Goodyear executives sought to frame their second quarter 2023 investor letter in the context of the company’s rich 125-year history. However, just a few paragraphs in, chairman, CEO and president Rich Kramer’s turned attention to the cost-saving actions already urgently underway in Europe:

“…To help improve our margins in EMEA over the long-term, we are moving with urgency on our previously announced footprint and SAG cost structure review in Europe.”

The aforementioned cost-saving actions include the previously announced plan to “reduce production capacity at our Fulda, Germany facility in support of our goal to reduce consumer tyre conversion cost in the region.”

However, the news was better in other regions. In the US, miles-driven data is up more than 2 per cent and Goodyear-branded inventory across the channels is down 14 per cent since the end of 2022.

Goodyear’s second quarter 2023 unit sales (Source: Goodyear)

Meanwhile, in the Asia Pacific segment, there are signs of recovery in replacement volume in China. And the Chinese OE business is said to be “performing well thanks to the industry recovery and the benefit of new fitment wins geared toward luxury, SUV and electric vehicles.”

And that all amounts to the chance to move “much closer” to Goodyear’s near-term target of 8 per cent margin: “While industry volumes in the second quarter were significantly more challenging than expected, we continue to expect to achieve second-half segment operating margin that should bring us much closer to our near-term target of 8 per cent.”

Nevertheless, the fact that Goodyear expects two of its three business units – Americas and Asia Pacific – “to record meaningful improvements in margin and exit the year with solid earnings heading into 2024” necessarily means that the company doesn’t expect such outcomes in EMEA.