The Goodyear Tire & Rubber Company reported its Q2 2023 financial results, a net loss of $208 million in Q2 2023, translating to a decline of approximately 225% compared to the net income of $166 million the company reported in the same period a year ago. The company said its losses were influenced by industry trends and operational challenges.
Operating Income and Sales Decline
Goodyear faced a 65.9% decline in segment operating income (SOI) for the quarter ending June 30, dropping $124 million. This decline was accompanied by an 8.6% decrease in sales overall, and a decline in tire unit sales volume, down by 10.7% compared to the previous year. Replacement volume experienced a drop of 15.1%, outweighing a modest 5.4% improvement in original equipment (OE) supplies.
Operating income in the Americas business unit underwent a 65.8% plunge to $103 million, coupled with a 6.6% decrease in sales to $2.9 billion. The company said this shift in the Americas business unit was primarily driven by a 10.9% reduction in tire volume, offset by a 5% increase in revenue per tire, excluding foreign currency. The decline in earnings is attributed to lower volume, including $43 million related to lower sales volume and $43 million of unabsorbed overhead stemming from reduced production in the first quarter.
According to Goodyear, operational disruptions were further exacerbated by the impact of its Tupelo tire plant being offline for several weeks, resulting in an estimated cost of $77 million in lost sales and a $64 million impact on the bottom line, including $50 million in Americas segment operating income and $14 million of corporate expense related to an insurance deductible.
The declines culminated in a net loss of $208 million for Goodyear in the second quarter.
Outlook and Projections
In response to the Q2 2023 results and ongoing market trends, Goodyear said it adjusted its industry outlook for the second half of the year. The company now anticipates lower consumer replacement and commercial replacement volumes, and Q3 2023 is projected to see a 3-4% worldwide decline in unit volumes, with expected drops of 3% and 5% in Americas and European consumer aftermarket sales, respectively.