AKRON—Despite a slight increase in sales, Goodyear reported decreases in both net and operating income for the third quarter of 2017.
Net income came in at $129 million, down from $317 million in third quarter 2016. Operating income also dropped to $357 million compared to $556 million a year ago thanks largely to higher raw material costs and the impact of lower volume.
Sales increased to $3.9 billion, up by about $100,000 compared to last year.
The first nine month figures had similar results in income—net income dropping to $442 million from $703 million and operating income at $1.1 billion down from $1.5 billion in 2016. Sales also decreased 1 percent to $11.3 billion.
Tire volumes dropped 6 percent to 117.2 million for the first nine months and 5 percent to 39.8 million for the third quarter.
"During the third quarter, we saw a continuation of the challenging industry conditions we experienced in the second quarter including lower consumer replacement volumes, production cuts by automakers and an increase of more than 30 percent in our raw material input costs," Richard J. Kramer, Goodyear chairman, CEO and president, said in a statement.
"Despite these headwinds, which we expect to moderate over the coming quarters, we continue to execute against our long-term strategy. We remain focused on the opportunities for driving profitable growth including our connected business model, which aligns all of our assets from our manufacturing plants to consumers who choose Goodyear online and at retail."
Third quarter and nine month sales in the Americas dropped to $2.04 billion and $6.03 billion, respectively, compared to $2.07 billion and $6.11 billion, respectively. Unit volumes also decreased to 17.1 million from 18.6 million in the quarter and 51.4 from 55.4 million in the first nine months.
Goodyear said its Americas business was impacted by hurricanes during the third quarter. It operates three chemical plants in Texas and has tire distribution and retail operations in the affected areas that were damaged or experienced shutdowns.
Sales were negatively impacted during the quarter in company-owned locations by about $23 million, resulting in lost profits of about $5 million in segment operating income. In addition, about $12 million in hurricane-related costs were incurred during the quarter representing fixed costs during chemical plant shutdowns as well as incremental clean-up and repair expenses. These items have been excluded from operating earnings per share in the quarter.
The company estimates that the negative impact of the hurricanes on the U.S. consumer replacement industry overall was about 1 percent in the third quarter.
Internationally, its Asia-Pacific operations experienced decrease in tire units for both the quarter—7.8 million from 8 million—and nine-month period—22.4 million from 22.6 million. However sales increased on both fronts, to $569 million from $541 million in the quarter and $1.61 billion from $1.56 billion in the nine-month period.
In Europe, volumes decreased to 14.9 million in the quarter compared to 15.4 million last year and 43.4 million year to date compared to 47 million in the same period last year. Sales in the quarter increased to $1.31 billion against $1.24 billion in 2016, but decreased to $3.66 billion compared to $3.75 billion in the first nine months.