Goodyear has reported results for the first quarter of 2017 and presented a flat picture.

“These results are a great outcome given an environment of rising raw material costs and weaker demand,” said Richard 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 US$3.7bn, about even with a year ago, largely due to improved price/mix and higher pricing of third-party chemical sales partially offset by lower tyre unit volume.

Tyre unit volumes totalled 40.0m, down 4% from 2016. Original equipment unit volume was down 8%, primarily driven by lower US auto production in the first quarter of 2017 and very strong volumes in the US and China during the first quarter of 2016. Replacement tyre shipments were down 2%.

Goodyear’s first quarter 2017 net income was $166m (65 cents per share), down from $184m (68 cents per share) a year ago. First quarter 2017 adjusted net income was $189m (74 cents per share), compared to $195m (72 cents per share) in 2016. Per share amounts are diluted.

The company reported first quarter segment operating income of $385m in 2017, down from $419m a year ago. The decrease was driven by the impact of lower volume and unabsorbed overhead, which were partially offset by favourable price/mix net of raw material costs and net cost saving actions.

Business Segment Results

  • Americas
    • Tyre Units: Q1 2017 – 17.2m: Q1 2016 – 18m
    • Sales: Q1 2017 – $1,958m: Q1 2016 – $1,951m
    • Segment Operating Income: Q1 2017 – $214m: Q1 2016 – $260m
    • Segment Operating Margin: Q1 2017 – 10.9%: Q1 2016 – 13.3%
    • Americas’ first quarter 2017 tyre unit volume was down 5%. Sales of $2.0bn were flat as higher chemical and tyre pricing as well as favourable foreign currency translation were partially offset by lower tyre unit volume. Replacement tyre shipments were down 2%. Original equipment unit volume was down 12%.
    • First quarter 2017 segment operating income of $214m was down 18% from the prior year. The decline was driven by the impact of unabsorbed overhead and lower volume, which were partially offset by favourable price/mix and lower raw material costs.
  • Europe, Middle East and Africa
    • Tyre Units: Q1 2017 – 15.5m: Q1 2016 – 16.2m
    • Sales: Q1 2017 – $1,239m: Q1 2016 – $1,251m
    • Segment Operating Income: Q1 2017 – $98m: Q1 2016 – $80m
    • Segment Operating Margin: Q1 2017 – 7.9%: Q1 2016 – 6.4%
    • Europe, Middle East and Africa’s first quarter 2017 sales decreased 1% from last year to $1.2bn, which reflects a 4% decrease in tyre unit volume and unfavourable foreign currency translation partially offset by improved price/mix. Replacement tyre shipments were down 5%. Original equipment unit volume was down 1%.
    • First quarter 2017 segment operating income of $98m was 23% above the prior year due to favourable price/mix net of raw material costs and lower selling, administrative and general expense partially offset by the impact of lower volume.
  • Asia Pacific
    • Tyre Units: Q1 2017 – 7.3m: Q1 2016 – 7.3m
    • Sales: Q1 2017 – $502m: Q1 2016 – $489m
    • Segment Operating Income: Q1 2017 – $73m: Q1 2016 – $79m
    • Segment Operating Margin: Q1 2017 – 14.5%: Q1 2016 – 16.2%
    • Asia Pacific’s first quarter 2017 sales increased 3% from last year to $502m primarily due to improved price/mix. tyre unit volumes were flat. Replacement tyre shipments were up 7%. Original equipment unit volume was down 9%.  
    • First quarter 2017 segment operating income of $73m was down 8% from last year as lower income in other tyre-related businesses and unfavourable foreign currency translation offset favourable price/mix net of raw materials.
  • Financial Targets
    • The company confirmed its 2017 segment operating income guidance of approximately $2.0bn and its 2020 financial targets and capital allocation plan.