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Jun 30, 2023
Goodyear Q2 2023 Earnings Report
Second quarter results were impacted by weaker industry volume and commercial truck industry, but price/mix offset raw material costs.
Key Takeaways
Goodyear's Q2 2023 sales decreased by 6.6% compared to the prior year, driven by lower volume and foreign exchange impacts, though partly offset by strong price/mix. The company reported a net loss of $208 million, a decrease from the net income of $166 million in the same quarter last year.
Second quarter segment operating income was $124 million, down $240 million compared to prior year.
Tire unit volume totaled 40.8 million units, down 10.7% from prior year levels.
Adjusted earnings per share on a diluted basis were a loss of $0.34 compared to income of $0.50 a year ago.
The synergies of the Cooper Tire combination during the quarter totaled approximately $36 million compared with the second quarter of last year.
Goodyear
Goodyear
Goodyear Revenue by Segment
Goodyear Revenue by Geographic Location
Revenue by Segment
Americas Revenue
CapyFin.comEMEA Revenue
CapyFin.comAsia Pacific Revenue
CapyFin.comRevenue by Geographic Location
Americas Revenue
CapyFin.comEMEA Revenue
CapyFin.comAsia Pacific Revenue
CapyFin.com Forward Guidance
Third quarter volumes should be helped by improving comparisons. We expect the third quarter to be the first this year where the net effect of price/mix, raw material costs and inflation will be positive.
Positive Outlook
- Overall unit volumes are expected to be lower than prior year levels with replacement volumes down 3-4% assuming an Americas consumer industry down ~3% and European consumer industry down ~5%.
- OE volumes are expected to be approximately flat to last year.
- We expect raw material costs to be lower than prior year by approximately $125 million.
- We expect the net benefit of price/mix vs raw materials to be $100 million. This includes raw material benefits partly offset by the net of favorable price carryover in consumer and mix declines related to lower commercial truck volume.
- We estimate the impact from non-raw material inflation in the third quarter to be approximately ($80) million compared with the third quarter 2022.
Challenges Ahead
- Lower production in the second quarter, excluding Tupelo, totaling 3.9 million units (of which 0.5 million are commercial) will negatively impact third quarter unabsorbed overhead.
- The impact of unabsorbed overhead in the fourth quarter from additional production cuts in the third quarter is expected to be ~($15) million.
- Third quarter free cash flow is expected to be a use of cash, in line with historical seasonality.
- Expect consumer replacement industry weakness with North America flat to slightly up and double-digit declines in Latin America in the third quarter.
- Commercial replacement industry impacted by continued destocking, although less than in Q2
Revenue & Expenses
Visualization of income flow from segment revenue to net income