Goodyear’s second-quarter 2021 sales were $4 billion, up 86% from a year ago. The company says the increase was driven by higher volume, the Cooper Tire merger, increased sales from other tire-related businesses and favorable foreign currency translation.
Tyre unit volumes totaled 37.5 million, up 84% from the prior year’s period. According to the company, the impact of the COVID-19 pandemic on industry demand moderated significantly relative to the prior year. Replacement tyre volume increased 78%, reflecting both continuing industry recovery and market share gains. Original equipment unit volume increased 109%, driven by higher vehicle production and increased market share. Volume growth also benefited from the Cooper Tire merger, which closed on June 7.
Goodyear’s second-quarter 2021 net income was $67 million (27 cents per share) compared to a net loss of $696 million ($2.97 per share) a year ago. The 2021 period included several significant items, including, on a pre-tax basis, a $117 million benefit related to a Brazilian Supreme Court ruling with respect to indirect taxes, transaction and other expenses of $48 million and amortization of Cooper Tire inventory step-up adjustments of $38 million both in connection with the Cooper Tire merger, a negative carryover impact of $27 million related to a winter storm in the U.S., and rationalization charges of $18 million, primarily associated with the closure of a manufacturing facility in Gadsden, Alabama. Goodyear’s second-quarter 2020 net loss included, on a pre-tax basis, a non-cash asset impairment charge of $148 million to reduce the carrying value of an equity interest in TireHub, and rationalization charges of $99 million, primarily associated with the closure of a manufacturing facility in Gadsden, Alabama. Second-quarter 2021 adjusted net income was $79 million (32 cents per share) compared to an adjusted net loss of $437 million ($1.87 per share) in the prior year’s quarter. Per-share amounts are diluted.
The company reported segment operating income of $299 million in the second quarter of 2021, up $730 million from a year ago. The company also reported merger-adjusted segment operating income of $349 million, which excludes certain costs triggered by the Cooper Tire merger. The increase in segment operating income primarily reflects the impacts of higher volume, including increased factory utilisation, improvements in price/mix, higher earnings from other tyre-related businesses and the benefits of cost-saving actions. These factors were partially offset by higher selling, administrative and general expenses (SAG), reflecting the impact of payroll and advertising expenses returning to more normal levels after last year’s COVID-19 response actions, and higher raw material costs.
The reported results also include Cooper Tire operating loss of $16 million, which includes $40 million of amortization of Cooper Tire inventory step-up, $6 million of other transaction-related items and $4 million incremental amortization of Cooper Tire intangible assets.
Year-to-Date Results
Goodyear’s sales for the first six months of 2021 were $7.5 billion, a 44% increase from the 2020 period, primarily due to higher volume, the Cooper Tire merger, increased sales from other tyre-related businesses and favourable foreign currency translation.
Tyre unit volumes totaled 72.5 million, up 40% from 2020. Replacement tyre shipments increased 41%, reflecting stronger industry demand and market share gains. Original equipment volume increased 39%, driven by higher global vehicle production and increased market share.
Goodyear’s net income was $79 million for the first six months of 2021 (32 cents per share) compared to a net loss of $1.3 billion ($5.62 per share) in the prior year’s period. The first half of 2021 included several significant items, including, on a pre-tax basis, rationalisation charges of $68 million, primarily associated with the modernisation of two manufacturing facilities in Germany and a plan to reduce SAG in EMEA, transaction and other expenses of $55 million and amortization of Cooper Tire inventory step-up adjustments of $38 million, a negative impact of $50 million related to a severe winter storm in the U.S. and a $117 million benefit related to a Brazilian Supreme Court ruling with respect to indirect taxes.
Goodyear’s net income for the comparable period in 2020 included, on a pre-tax basis, a non-cash charge of $295 million related to a valuation allowance on certain deferred tax assets for foreign tax credits, a non-cash impairment charge of $182 million to reduce the carrying value of goodwill in the EMEA business, a non-cash asset impairment charge of $148 million to reduce the carrying value of an equity interest in TireHub, and rationalization charges of $108 million, primarily associated with the closure of a manufacturing facility in Gadsden, Alabama. Goodyear’s adjusted net income for the first six months of 2021 was $184 million (76 cents per share), compared to a net loss of $575 million ($2.46 per share) in the prior year’s period. Per share amounts are diluted.
The company reported segment operating income of $525 million for the first six months of 2021, up $1 billion from a year ago. The company also reported merger-adjusted segment operating income of $575 million, which excludes certain costs triggered by the Cooper Tire merger. The increase in segment operating income primarily reflects the impacts of higher volume, including increased factory utilisation, improvements in price/mix, higher earnings from other tire-related businesses and the benefits of cost-saving actions
