The Goodyear Tire & Rubber Co. has reported results for the first quarter of 2019.
Goodyear’s first quarter 2019 sales were $3.6 billion, down 6 percent from $3.8 billion a year ago, driven by unfavorable currency translation and lower volume in its international businesses, partially offset by improvements in price/mix.
Tire unit volumes totaled 38 million, down 3% from 39 million in the year ago quarter. Original equipment unit volume declined 7%, primarily reflecting weaker U.S. volumes and lower automotive production in China and India. Replacement tire shipments were down less than 1% compared with a year ago.
Goodyear’s net loss was $61 million in the first quarter of 2019 (26 cents per share) compared to net income of $75 million (31 cents per share) in the year-ago quarter. The first quarter of 2019 included several significant items, most notably $93 million in charges related to the previously announced plan to modernize two tire manufacturing facilities in Germany. First quarter 2019 adjusted net income was $45 million (19 cents per share) compared to $122 million (50 cents per share) in 2018. Per share amounts are diluted.
“We gained momentum in the U.S. during the quarter, as our consumer and commercial replacement businesses both grew share, while increasing the value we capture in the marketplace,” said Richard Kramer, chairman, CEO and president. “In addition, we took steps to increase our long-term competitiveness. The plans we announced to modernize our Hanau and Fulda manufacturing facilities in Germany will improve our supply of cost-effective premium tires in Europe, helping us achieve our goal of having the right tire, at the right place, at the right time, at the right cost,” added Kramer.
German Modernization and Restructuring
During the first quarter, Goodyear announced plans to invest approximately $122 million to modernize its manufacturing facilities in Hanau and Fulda, Germany, as part of its strategy to strengthen the competitiveness of its global manufacturing footprint and increase its supply of premium, large-rim-diameter consumer tires.
The transformation will result in the Hanau and Fulda manufacturing facilities having more automated production and being fully capable of producing consumer tires with rim diameters 17 inches or larger, better positioning the company to meet the growing demand for higher margin, premium tires in Europe.
The company anticipates that required changes to the layout of the plants, efficiency gains from the new equipment and the decision to curtail production of tires for the declining, less profitable segments of the tire market will result in approximately 1,100 job reductions. These actions will increase the productivity of both plants and the resulting conversion savings are expected to improve Europe, Middle East and Africa’s segment operating income by $60 million to $70 million on an annualized basis over a three-year period beginning in 2020. The plan remains subject to consultation with relevant employee representative bodies.