Goodyear (GT) Q1 Earnings Miss Estimates, Sales Rise Y/Y

Goodyear Tire GT delivered first-quarter 2023 adjusted loss per share of 29 cents wider than the Zacks Consensus Estimate of 22 cents and down from the earnings of 37 cents per share reported in year-ago quarter. Lower-than-anticipated sales in the Americas and Asia Pacific segments weighed on the results.

The company generated net revenues of $4,941 million, rising 0.7% on a year-over-year basis, riding on pricing actions. But the top line missed the Zacks Consensus Estimate of $5,062 million.

In the reported quarter, tire volume was 41.8 million units, down 7.1% from the year-ago period.

The Goodyear Tire & Rubber Company Price, Consensus and EPS Surprise

The Goodyear Tire & Rubber Company price-consensus-eps-surprise-chart | The Goodyear Tire & Rubber Company Quote

Segmental Performance

In the reported quarter, the Americas segment generated revenues of $2,867 million, around 1.6% lower than the prior-year period, which lagged the consensus metric of $3,161 million. The segment registered an operating income of $79 million, which decreased 63.4% from the year-ago period. The operating margin was hit by lower volumes. Also, the figure missed the consensus mark of $128 million.

Revenues in the Europe, Middle East and Africa (EMEA) segment were $1,492 million, up 4.6% from the year-ago period. Also, the figure outperformed the consensus mark of $1,301 million. The operating income for the segment was $8 million in the quarter, contracting 86.4% on lower volumes. But the figure surpassed the consensus mark of an operating loss of $11.63 million.

Revenues in the Asia Pacific segment increased 2.6% year over year to $582 million but lagged the consensus mark of $621 million. The segment’s operating profit income was $38 million, up 35.7% from the year-ago figure, owing to raw material costs that offset the price/mix benefits.

Financial Position

Selling, general & administrative expenses fell to $664 million from $788 million in the year-ago period.

Goodyear had cash and cash equivalents of $1,082 million as of Mar 31, 2023, down from $1,227 million on Dec 31, 2022. In the first quarter of 2023, long-term debt and finance leases amounted to $8,204 million, up from $7,267 million on Dec 31, 2022. Capital expenditure in the quarter was $291 million, up from $276 million in the year-ago quarter.

Revised Outlook 2023

For the full year 2023, the company, as of now, anticipates raw material costs to rise by about $100 million, contracting from the prior guidance of $200 million. Capital expenditures, interest expenses and depreciation and amortization are expected to be $1 billion, $500 million and $950 million, respectively, the same as the previous guidance.

Zacks Rank & Key Picks

GT currently carries a Zacks Rank #3 (Hold).

A few top-ranked players in the auto space are Geely Automobile Holdings Limited GELYY, BYD Company Limited BYDDY and Mercedes-Benz Group AG MBGAF, all of which sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Geely is engaged in automobile manufacturing and related areas. The Zacks Consensus Estimate for GELYY’s 2023 sales and earnings imply year-over-year growth of around 57.5% and 7.4%, respectively.

BYD is engaged in the research, development, manufacture and distribution of automobiles, secondary rechargeable batteries and mobile phone components. The Zacks Consensus Estimate for BYDDY’s 2023 sales implies year-over-year growth of around 209.6%.

Mercedes-Benz develops, manufactures and sells passenger cars, including premium and luxury vehicles. The Zacks Consensus Estimate for MBGAF’s 2023 sales implies year-over-year growth of 6%.

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