The Goodyear Tire & Rubber Company today reported results for the first quarter of 2017.
“These results are a great outcome given an environment of rising raw material costs and weaker demand,” said Richard J. Kramer, chairman, chief executive officer and president. “This solid performance is a result of the disciplined execution of our strategy,” he added.
“While raw material inflation has moderated in recent weeks, we continue to expect a significant year-over-year headwind in 2017,” said Kramer. “We remain confident in our ability to offset raw material cost inflation over time.”
Goodyear’s first quarter 2017 sales were $3.7 billion, about even with a year ago, largely due to improved price/mix and higher pricing of third-party chemical sales partially offset by lower tire unit volume.
Tire unit volumes totaled 40.0 million, down 4 percent from 2016. Original equipment unit volume was down 8 percent, primarily driven by lower U.S. auto production in the first quarter of 2017 and very strong volumes in the U.S. and China during the first quarter of 2016. Replacement tire shipments were down 2 percent.
Goodyear’s first quarter 2017 net income was $166 million (65 cents per share), down from $184 million (68 cents per share) a year ago. First quarter 2017 adjusted net income was $189 million (74 cents per share), compared to $195 million (72 cents per share) in 2016. Per share amounts are diluted.
The company reported first quarter segment operating income of $385 million in 2017, down from $419 million a year ago. The decrease was driven by the impact of lower volume and unabsorbed overhead, which were partially offset by favorable price/mix net of raw material costs and net cost saving actions.
Reconciliation of Non-GAAP Financial Measures
See the note at the end of this release for further explanation and reconciliation tables for Segment Operating Income and Margin; Adjusted Net Income; and Adjusted Diluted Earnings per Share, reflecting the impact of certain significant items on the 2017 and 2016 periods.
Business Segment Results
Americas
| First Quarter | ||
|---|---|---|
| (in millions) | 2017 | 2016 |
| Tire Units | 17.2 | 18.0 |
| Sales | $1,958 | $1,951 |
| Segment Operating Income | 214 | 260 |
| Segment Operating Margin | 10.9% | 13.3% |
Americas’ first quarter 2017 tire unit volume was down 5 percent. Sales of $2.0 billion were flat as higher chemical and tire pricing as well as favorable foreign currency translation were partially offset by lower tire unit volume. Replacement tire shipments were down 2 percent. Original equipment unit volume was down 12 percent.
First quarter 2017 segment operating income of $214 million was down 18 percent from the prior year. The decline was driven by the impact of unabsorbed overhead and lower volume, which were partially offset by favorable price/mix and lower raw material costs.
Europe, Middle East and Africa
| First Quarter | ||
|---|---|---|
| (in millions) | 2017 | 2016 |
| Tire Units | 15.5 | 16.2 |
| Sales | $1,239 | $1,251 |
| Segment Operating Income | 98 | 80 |
| Segment Operating Margin | 7.9% | 6.4% |
Europe, Middle East and Africa’s first quarter 2017 sales decreased 1 percent from last year to $1.2 billion, which reflects a 4 percent decrease in tire unit volume and unfavorable foreign currency translation partially offset by improved price/mix. Replacement tire shipments were down 5 percent. Original equipment unit volume was down 1 percent.
First quarter 2017 segment operating income of $98 million was 23 percent above the prior year due to favorable price/mix net of raw material costs and lower selling, administrative and general expense partially offset by the impact of lower volume.
Asia Pacific
| First Quarter | ||
|---|---|---|
| (in millions) | 2017 | 2016 |
| Tire Units | 7.3 | 7.3 |
| Sales | $502 | $489 |
| Segment Operating Income | 73 | 79 |
| Segment Operating Margin | 14.5% | 16.2% |
Asia Pacific’s first quarter 2017 sales increased 3 percent from last year to $502 million primarily due to improved price/mix. Tire unit volumes were flat. Replacement tire shipments were up 7 percent. Original equipment unit volume was down 9 percent.
First quarter 2017 segment operating income of $73 million was down 8 percent from last year as lower income in other tire-related businesses and unfavorable foreign currency translation offset favorable price/mix net of raw materials.
Financial Targets
The company confirmed its 2017 segment operating income guidance of approximately
$2.0 billion and its 2020 financial targets and capital allocation plan.
Shareholder Returns
The company paid a quarterly dividend of 10 cents per share of common stock on March 1, 2017. The Board of Directors has declared a quarterly dividend of 10 cents per share payable June 1, 2017, to shareholders of record on May 1, 2017.
As a part of its previously announced $2.1 billion share repurchase program, the company repurchased 0.7 million shares of its common stock for $25 million during the first quarter. Since its inception, purchases under the program total 31.9 million shares for $938 million.
