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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).
Revenue by Segment
Revenue by Geographic Location
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.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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