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GT Nasdaq· The Goodyear Tire & Rubber Company
Earnings report Q4 2023

Goodyear Tire & Rubber Company Reports Decrease in Revenue for Latest Quarter

Segments of revenue

Goodyear Tire & Rubber Company reported a decrease in net sales for the latest quarter. Net sales for the year ended December 31, 2023, were $20.07 billion, compared to $20.81 billion in 2022 and $17.48 billion in 2021.

Strengths

Despite the decrease in net sales, Goodyear experienced share gains from new OE fitments in Asia Pacific and EMEA, as well as a continued recovery of OE vehicle production in 2023. This indicates that the company is successfully expanding its market presence and benefiting from increased demand in these regions. Additionally, Goodyear's management announced a transformation plan called Goodyear Forward, which aims to optimize the company's portfolio, deliver significant margin expansion, and reduce leverage to drive substantial shareholder value creation. This plan is expected to benefit segment operating income by approximately $350 million in 2024.

Challenges

The decrease in net sales can be attributed to various factors. The cost of goods sold (CGS) was $16.56 billion in 2023, representing 82.5% of sales, compared to $16.95 billion and 81.5% of sales in 2022. The decrease in CGS was primarily due to lower tire volume, lower costs in other tire-related businesses, foreign currency translation, lower raw material costs, and the impact of the Tupelo storm. However, these decreases were partially offset by rationalization charges and higher interest expense. Additionally, Goodyear reported a net loss of $689 million, or $2.42 per share, in 2023, compared to a net income of $202 million, or $0.71 per share, in 2022. This change in net income (loss) was primarily due to higher rationalization charges, lower segment operating income, a non-cash goodwill impairment charge, higher interest expense, and higher other expenses.

Noteworthy

It is worth noting that Goodyear's management expects a slight decrease in tire volume in the first quarter of 2024, driven by consumer and commercial replacement in Americas and EMEA. However, this volume decrease is expected to be partially offset by growth in Asia Pacific replacement and OE volume, driven by the continued benefits of new OE fitment wins. This indicates that Goodyear is actively adapting to market conditions and leveraging its strengths in different regions to mitigate potential challenges.

Summary

Goodyear Tire & Rubber Company reported a decrease in net sales for the latest quarter, primarily driven by lower tire volume and various cost-related factors. However, the company demonstrated strengths in gaining market share in Asia Pacific and EMEA, as well as implementing a transformation plan to optimize its portfolio and drive shareholder value. Goodyear's management expects a slight decrease in tire volume in the first quarter of 2024 but anticipates growth in other regions. Overall, Goodyear is facing challenges but remains focused on executing its strategic initiatives to enhance its financial performance.

Source documents

Form 10-K  filed on Feb 13, 2024
131 pages scanned

Reference data

Company financials Q4 revenue 5.12B
Analyst estimates Q4 EPS beat by 142.18%
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