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Goodyear Q4 Loss Soars on Goodwill, Rationalization Charges
Tire Sales Continue to Fall in Commercial Vehicle Sector
Losses nearly tripled at in the fourth quarter of 2023 compared with the year-ago period as the tire manufacturer digested restructuring costs and sales slowed, including in the North American commercial vehicle sector.
Akron, Ohio-based Goodyear鈥檚 , or $1.02 per diluted share, from $104 million, 37 cents, in the year-ago period, it said.
A substantial percentage of that red ink came in the form of a $230 million goodwill impairment and a $200 million rationalization charge related to the company鈥檚 long-awaited Goodyear Forward restructuring plan.
Goodyear 鈥 now headed by recently installed , who previously ran automaker 鈥 North America operations 鈥 said the goodwill impairment charge was mostly related to its European, Middle East and Africa division.
Unveiled Nov. 15, promised savings of $350 million for the first full year, $50 million in the first quarter of 2024 and $750 million in year two.
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The company鈥檚 sales revenue fell 4.8% or $258 million to $5.116 billion in Q4 from $5.374 billion in the same period a year earlier.
Revenue in the most recent quarter came in below analyst expectations. expected quarterly revenue of $5.35 billion and pegged consensus analyst expectations at $5.39 billion, he said in a Feb. 12 research note.
Goodyear鈥檚 tire sales in the quarter totaled 45.4 million units in the most recent three months, down 3.8% or 1.8 million tires compared with 47.2 million units in the same period a year earlier.
Tire sales declined as a result of lower replacement volumes and third-party chemical sales, it said.
Replacement volumes fell 6.7% year-on-year, or 2.3 million units, while original equipment sales rose 6%, or 500,000 units, the company said, without providing specific numbers by press time.
鈥淔ourth-quarter earnings were ahead of the expectations we outlined during our [Goodyear Forward] announcement on Nov. 15, 2023, driven by strong operating results in Americas and Asia Pacific. These results reflected our strongest price/mix ratio versus raw materials since the fourth quarter of 2012. Additionally, we generated the strongest fourth quarter operating cash flow since the pandemic,鈥 Goodyear said in its quarterly investor letter.
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Goodyear said its raw material costs decreased $329 million year-over-year without providing figures for comparison.
In the Americas, Goodyear said its Q4 operating margin was 10.1%, the highest quarterly result since 2021 despite weak commercial truck sales.
Overall, the company鈥檚 Americas tires sales volume fell 8.8% or 2.3 million units year-over-year to 23.1 million units after a particularly strong final three months of 2022 in which Goodyear sold 25.4 million units.
Replacement volume fell 8.9%, or 1.9 million units, while original equipment volume declined 8.6%, or 400,000 units, but the company鈥檚 commercial truck replacement volume declined 12% on continued industry weakness, it said.
The original equipment decrease primarily reflects strike-related impacts during Q4 and weaker commercial truck build rates given weak trucking industry conditions, it added.
Looking forward, Goodyear said its first quarter of 2024 global tire sales are expected to fall about 2% year-over-year, driven by weaker replacement tire appetite.
In the Americas, Goodyear expects consumer replacement sales to fall by a percentage in the 鈥渓ow-single digits鈥 while the commercial tire industry is expected to be 鈥渄own slightly.鈥
鈥淭he soft Q1 volume outlook ([approximately] 41m units), suggests a meaningful [quarter-over-quarter] decline from 4Q鈥檚 45m units,鈥 Deutsche Bank鈥檚 Rosner said in the research note.
