The Goodyear Tire & Rubber Co. reported a 41% drop in sales and 45% decrease in tyre unit volumes compared to a year ago in its Q2 2020 financial results, released Friday.
According to the company, the decline was driven by lower industry volume and reduced sales from other tyre-related businesses. These factors were partially offset by improvements in price/mix, Goodyear says.
The company reported $2.1 billion in sales for the second quarter and its tyre volumes totaled 20.4 million. Goodyear said industry demand during the second quarter was significantly affected by the actions governments, businesses and consumers took to slow the spread of COVID-19, with the greatest impact occurring in April and May. Replacement tyre shipments declined 39%, due to low consumer demand, temporary store closings and wholesale and retail customers reducing inventory levels, the company said.
OE unit volume decreased 62%, driven by reduced vehicle production, including the effects of global auto manufacturers temporarily suspending vehicle production.
“Although our first half results were greatly affected by difficult industry conditions as a result of the ongoing COVID-19 pandemic, the decisive actions we took to safeguard our business helped mitigate the impact on our results,” said Richard J. Kramer, chairman, chief executive officer and president.
“While we are encouraged to see industry demand gradually recovering in most major markets, our plans for the second half consider the challenges and uncertainties that remain. We continue to focus on the wellbeing of our associates, servicing our customers and supporting our brands while appropriately managing our costs and working capital.
“We are also committed to supporting the strong growth we are seeing in our e-commerce and mobile installation businesses. These investments in distribution will strengthen our leadership position and support our long-term growth prospects as consumer buying behavior continues to evolve within the tyre industry,” Kramer said.
Goodyear’s second quarter 2020 net loss was $696 million ($2.97 per share) compared to net income of $54 million (23 cents per share) a year ago. According to Goodyear, the decrease was driven by a decline in segment operating income, a non-cash asset impairment charge and higher rationalisation charges.
Second quarter 2020 adjusted net loss was $437 million ($1.87 per share), compared to adjusted net income of $58 million (25 cents per share) in 2019, the company reported. Per share amounts are diluted.
Goodyear also reported a segment operating loss of $431 million in the second quarter of 2020, down $650 million from a year ago. The decline primarily reflects lower volume and reduced factory utilisation. These factors were partially offset by lower SAG, driven by reductions in payroll and advertising expenses relating to actions taken as a result of the COVID-19 pandemic.