Sales in the Americas decreased 5.6 percent in the third quarter to $3.12 billion, with SOI dropping 15.7 percent to $258 million. The drop in volume, Goodyear said, reflected the impact of low-cost imports in Latin America, the continuing effect of the storm on the firm's facility in Tupelo, Miss., and depressed conditions in the commercial truck industry. Goodyear said its consumer truck replacement volumes fell 10 percent, caused by continued destocking, but that was better than the industry decline of 16 percent.
On the bright side, the 8.3-percent SOI margin is a major improvement over Goodyear's operating margin of about 3 percent in the first half of 2023, the firm told investors.
Business in its EMEA unit remained below historical levels because of "continued industry volume weakness and elevated inflation."
Net sales actually increased 1.2 percent in the region to $1.37 billion, driven by an increase in revenue per tire of 10 percent. Operating income for the segment was down 26.7 percent to $22 million.
Goodyear's EMEA financials also were impacted by the Aug. 20 fire at its tire factory in Debica, Poland. Tire production at the plant currently is at 70 percent, the firm said in its earnings report, with the fire causing an estimated $14 million negative impact on profits for the quarter. It expects a further $15 million impact on SOI in the fourth quarter and an additional $5 million in corporate expenses.
Kramer said on the Nov. 7 analyst call that Goodyear's near-term goal was to get the EMEA business back to its pre-COVID SOI of $50 million a quarter, but Q3 remained well below that.
"The industry is still really challenged as relative to 2019," he said on the call. "Consumer business is down 15 percent and truck business is down 22 percent versus 2019. It's not back to normal.
"We have been and are evaluating EMEA and looking at all options to generate value in the near term, and continuing to assess the long-term solutions as well given the macro environment of what's going on over there."
Goodyear in September revealed a restructuring plan that would cut 1,200 jobs in the EMEA region, representing about 15 percent of the business unit's salaried employment. Goodyear also plans to halve capacity at its tire plant in Fulda, Germany. That move, which would involve 550 job losses, is intended to reduce consumer-tire production costs in the region, Goodyear said, and deliver $30 million in annualized segment operating income benefits by mid-2024.