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Sep 30, 2022
Goodyear Q3 2022 Earnings Report
Goodyear's third quarter results reflected resilience amidst industry volume weakness and cost inflation, with strong price/mix offsetting cost headwinds.
Key Takeaways
Goodyear's Q3 2022 net sales increased by 8% compared to the prior year, driven by pricing actions, despite a decrease in tire volumes. The company's operating income remained relatively steady due to its ability to offset cost headwinds with price/mix strategies. Goodyear's net income was $44 million, and adjusted net income was $116 million.
Net sales grew 8% compared with third quarter of 2021, 15% excluding foreign currency.
Unit volume down 3% versus 2021 reflecting weaker replacement industry.
Revenue per tire (excluding currency impact) up 16% versus third quarter of 2021.
Goodyear net income of $44 million (compared to $132 million prior year); adjusted net income of $116 million (compared to $206 million prior 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
The company expects a continuation of many of the same underlying trends seen during the third quarter, with cost inflation expected to peak in the fourth quarter. Benefits from strong price/mix are expected to continue, and raw material costs are expected to increase. The book tax rate is expected to remain elevated.
Positive Outlook
- We expect continued benefits from strong price/mix supported by previously announced price increases for consumer and commercial replacement products.
- Raw material costs are expected to be up by about $500 million in the fourth quarter, which includes the impact of the stronger dollar and higher transportation and supplier costs.
- Some raw material costs originally expected to occur in the third quarter will now be realized in the fourth quarter, given lower-than-expected third quarter volumes.
- Recent trends suggest an improvement in key feedstocks like carbon black, natural rubber and steel – which could benefit results in 2023 if trends continue.
- We expect price/mix to exceed raw material costs, with a net benefit similar to what we saw in the third quarter.
Challenges Ahead
- Given energy price escalation in Europe and reduced third quarter volumes, however, we now expect cost inflation to peak in the fourth quarter, rather than the third.
- Raw material costs are expected to be up by about $500 million in the fourth quarter, which includes the impact of the stronger dollar and higher transportation and supplier costs.
- We estimate the impact from calculated and excess (non-raw material) inflation in the fourth quarter to be $250 to $300 million compared with the fourth quarter of last year.
- We expect our book tax rate to remain elevated for the fourth quarter, although it will remain sensitive to movements in income across geographies.
- Expect continued volume softness in the fourth quarter given outlook for weak economic activity in the region.
Revenue & Expenses
Visualization of income flow from segment revenue to net income