Goodyear CEO Stewart touts gains in sluggish market

AKRON—Amid a sluggish tire market so far this year, Goodyear touted large gains in segment operating income and the sale of its OTR business in an investor presentation on Aug. 1.

In the second quarter, Goodyear maintained focus on streamlining operations and finding cost efficiencies as part of its Goodyear Forward plan.

"We are clearly progressing on our goals as part of our Goodyear Forward plan, and that is true on multiple fronts," Mark Stewart, Goodyear's chief executive officer and president, told investors. "In the second quarter, we achieved significant margin expansion, another strong quarter of year-over-year earnings growth."

Segment operating income (SOI) was $339 million, a year-over-year increase of 173 percent, and SOI margin was 7.4 percent, an increase of 4.9 percent compared to 2023.

"Our results show strong price/mix versus raw materials and stepped-up results on Goodyear Forward savings," Stewart said.

Stewart highlighted SOI in the Americas that has increased 134 percent in the last year.

"Americas saw remarkable gains with SOI up nearly $140 million from last year, and in the U.S. our volume performance in the 18-inch and greater segment was in line with industry," he said.

The tire market remains sluggish, and second-quarter Goodyear tire sales were down by single digits compared to last year. The biggest impact is being felt in the Americas, where net sales were down 8 percent from last year.

"The industry environment in the first half has not been supportive, including downgrades to OEM production levels, and significantly more challenging replacement markets, which have been saturated by low-end imports," Stewart said, adding the company believes the tire market will remain flat throughout the year.

"Magnifying this challenge, industry sell out in the U.S. retail channel was negative during the quarter and down high single to low double digits at the traditional retailers that instigated heavy promotional activities by other manufacturers at the lower end of the market," Stewart said.

On July 22, Goodyear agreed to sell its OTR tire business to Yokohama Rubber Co. Ltd. in a $905 million cash sale. At the time, Stewart called the sale "an important milestone" in implementing its Goodyear Forward plan, which included divesting its OTR business, Dunlop brand and chemicals business.

Goodyear announced it was relocating 175 positions from its Akron headquarters to a new shared-services location for the Americas business unit in Costa Rica. The move also includes layoffs, the company said.

"In manufacturing Christina (Zamarro, Goodyear chief financial officer) and I are continuing to meet regularly with our factory leaders reviewing progress against our efficiency plans and making sure any roadblocks are removed," Stewart said. "It's just one example the team has been able to achieve record levels of elite yield over the last couple of months."

He noted that the company reduced overtime in the Americas by 15 percent in the second quarter.

Goodyear saw a benefit of $50 million in the second quarter as the plant in Tupelo, Miss., is back in full production following a tornado last year, Zamarro said. Goodyear also received insurance recoveries from both the Tupelo tornado and significant fire last August at the tire plant in Debica, Poland, of around $63 million.

Goodyear expects industry challenges to continue this year.

"As a result, we will continue to focus on profitable volume segments of the market as well as the areas that are generating the highest return for us, as well as continuing the execution of our cost reduction efforts," Stewart said.

"We continue to make and execute the appropriate adjustments in our cost base to ensure we meet Goodyear Forward objectives and our operating plans.

"We are already making great progress and these recent challenges means that we will need to continue to dig deeper we will continue to execute to continue to achieve our goals."