AKRON—Goodyear suffered a 32.4 percent drop in operating income for the quarter ended March 31, and posted a $61 million net loss due to a number of extraordinary items.
Sales were off 6.1 percent to $3.6 billion, driven by unfavorable currency translation and lower international volume, but were offset partially by improvements in price/mix, Goodyear said.
Unit volumes fell 2.6 percent to 38 million.
Segment operating income fell to $190 million, or 5.3 percent of sales, on the negative effects of higher raw material costs, lower volume, unfavorable foreign currency translation and weaker results from other tire-related businesses, Goodyear said.
The negatives partially were offset by favorable price/mix, improved overhead absorption and net cost savings.
In a conference call with analysts, neither Richard Kramer, chairman, CEO and president, nor Darren Wells, treasurer, provided any earning guidance for the full fiscal year.
Mr. Kramer did note that Goodyear "gained momentum" in the U.S. during the quarter, based on market share growth in the consumer and commercial replacement businesses.
In the company's 10-Q filing with the Securities and Exchange Commission, Goodyear said it expects to continue to experience challenging global industry conditions, including higher raw material costs of roughly $300 million versus 2018, foreign currency headwinds and volatility in emerging markets, throughout 2019.
On the plus side, Goodyear said it expects to see benefits from the ramp-up of its Mexican tire plant and of the TireHub distribution joint venture with Bridgestone Americas, as well as from pricing actions implemented in 2018 and gains in sales of higher value-added consumer replacement tires.
Goodyear attributed the net loss largely to $93 million in charges it took related to plans to modernize tire plants in Fulda and Hanau, Germany. Discounting this and other one-time charges yields an adjusted net income was $45 million, which is 62.2 percent below the 2018 first quarter net.
The firm's Americas business unit results mirrored the corporate results — operating income down 29.9 percent to $89 million on 2.7 percent lower sales of $1.88 million, resulting in a two-point drop in the operating ratio to 4.7 percent.
Goodyear cited higher raw materials costs, reduced earnings from tire-related businesses and unfavorable foreign currency translation for the earnings drop, and the negative effect of foreign currency translation and lower third-party chemical sales for the reduced revenue.
Replacement tire shipments were up 3 percent, Goodyear said, driven by a 4 percent increase in consumer replacement business. U.S. consumer replacement unit sales volume increased 6 percent, led by above-average growth in the 17-inch-and-greater category. Original equipment volume fell 8 percent.