The Goodyear Tire & Rubber Co. has reported results for the third quarter of 2018.
“We continued to improve the operating performance in our key mature markets, driven by strong volume growth, including significant increases in the more profitable 17-inch-and-greater rim sizes in the U.S. and Europe,” said Richard Kramer, chairman, CEO and president. “These gains contributed to the improving momentum in our two largest segments, as EMEA delivered operating income growth of more than 20 percent and Americas turned in its best year-over-year performance since 2016.”
“We are pleased to see that in total, our operating performance was relatively stable in a period of increasing volatility. The issues that began to emerge in the second quarter have persisted – including a stronger U.S. dollar and deteriorating market conditions in China. Additionally, newly enacted emission standards in Europe, growing economic volatility in Latin America and a changing global trade environment have added incremental challenges for the industry. We have successfully navigated through similar conditions in the past, and I am confident that our strategic plan and the investments we are making are improving our long-term competitive position.”
Goodyear’s third quarter 2018 sales were $3.9 billion, up slightly compared with a year ago, driven by higher volume, improved price/mix and higher sales in other tire-related businesses. These increases were substantially offset by unfavorable foreign currency translation.
Tire unit volumes totaled 40.5 million, up 2 percent from 2017. Replacement tire shipments increased 4 percent, driven by strength in Americas and EMEA. Original equipment unit volume decreased 4 percent, primarily driven by lower consumer demand in China.
Goodyear’s third quarter 2018 net income was $351 million ($1.48 per share), up from $129 million (50 cents per share) a year ago. The increase was primarily driven by a $287 million net gain resulting from the company’s TireHub transaction, which was completed during the quarter. Third quarter 2018 adjusted net income was $163 million (68 cents per share), compared to $177 million (70 cents per share) in 2017. Per share amounts are diluted.
The company reported segment operating income of $362 million in 2018, virtually flat with $367 million a year ago.
Goodyear’s net sales for the first nine months of 2018 were $11.6 billion, a 3 percent increase from the 2017 period, primarily due to improvements in price/mix and higher unit volumes.
Tire unit volumes totaled 118.5 million, up 1 percent from 2017. Replacement tire shipments increased 2 percent, driven by stronger consumer replacement shipments in EMEA and Americas. OE tire volume decreased 1 percent, with declines in EMEA and Americas partially offset by increases in Asia Pacific during the first half of the year.
Goodyear’s year-to-date net income of $583 million ($2.42 per share) is up from $442 million ($1.73 per share) in the prior year’s period. Adjusted net income for the first nine months was $434 million ($1.80 per share), compared to $543 million ($2.13 per share) in the prior year’s period. Per share amounts are diluted.
The company reported segment operating income of $967 million for the first nine months of 2018, down from $1.1 billion a year ago. The decrease was largely attributable to the effect of higher raw material costs and reduced price/mix, partially offset by net cost savings and the impact of higher volumes.
Goodyear has revised its expectations for 2018 segment operating income to reflect the increasingly challenging industry environment. The company says it expects its segment operating income to exceed $1.3 billion. This outlook reflects the impact of higher raw material costs, which includes the negative impact of transactional currency headwinds, further industry weakness in China and economic volatility in Brazil.
Goodyear also announced a 14 percent increase in its quarterly dividend to 16 cents per share of common stock on Oct. 10, payable on Dec. 3, to shareholders of record on Nov. 1. The payout represents an annual rate of 58 cents per share for 2018 and 64 cents per share for 2019.
As a part of its previously announced $2.1 billion share repurchase program, the company repurchased 4.2 million shares of its common stock for $100 million during the third quarter. Since its inception, purchases under the program total 52 million shares for $1.5 billion.