Ending a difficult year, Goodyear showed areas of loss and areas of increasing growth, with total year sales down 16% and tyre unit volumes down 19%. However, whilst the segment operating sector for the whole year reduced by $14 million, it rose substantially during the last quarter, showing room for optimism.
How Goodyear Fared in 2020
Releasing all their results for the year, Goodyear’s fourth quarter 2020 sales were $3.7 billion, down 2% from a year ago, which they attribute to lower volume and unfavourable foreign currency translation, whilst these negatives were balanced by improvements in the price/mix.
Tyre unit volumes totalled 37.7 million, which marked a 5% decease from from the results of 2019. Factors for the decline in productivity include the economic disruption caused by the COVID-19 pandemic, as well as the decline in replacement tyre shipments (7%) which reflect a lower consumer demand.
Goodyear’s fourth quarter 2020 net income was $63 million compared to a net loss of $392 million a year ago, with the adjusted net income being $103 million compared to $45 million in 2019.
The most exciting news from Goodyear in the fourth quarter was $60 million increasing on segment operating income ($302 million) from the prior year. Goodyear believe this comes from cost-saving actions, lower raw material costs and improvements in the price/mix.
Caping off the year, Goodyear’s net sales $12.3 billion (16% less than 2019), tyre unit volumes totaled 126.0 million (down 19% from 2019, including a 17% reduction in replacement tyre shipments and a 23% reduction in OE). Goodyear’s net loss was $1.3 billion (compared to a net loss of $311 million in 2019), however their segment operating loss of $14 million in 2020 is far better than their $959 million loss in 2019.
Goodyear Gains in Replacement Tyre Shipments in China
Asia Pacific’s fourth quarter 2020 sales decreased 2% to $537 million, driven by lower volume and an unfavourable price/mix, primarily reflecting the impact of discontinued OE fitments in China. Tyre unit volume declined 2%. Original equipment unit volume declined 13%. Replacement tire shipments increased 4%, driven by double-digit growth in China and India.
Fourth quarter 2020 segment operating income of $43 million was down $9 million from the prior year’s quarter. In addition to discontinued OE fitments in China, lower earnings reflected adverse results in other tire-related businesses, primarily aviation. These factors were partially offset by lower raw material costs.
“We Have Good Momentum Entering 2021” States Goodyear President
“We delivered strong performance to end a challenging year,” said Richard J. Kramer, Chairman, Chief Executive Officer and President. “With a determination to win with our products in the marketplace and a relentless focus on cost and cash, we finished the year on a high note.
“We have good momentum as we enter 2021. Our commercial business continues to outperform the industry, our consumer replacement business is strengthening, and we are beginning to see the benefits of our robust consumer OE pipeline. I am confident we are positioned to capitalize on stronger industry fundamentals in 2021,” Kramer added resoundingly.