Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Goodyear Tire & Rubber Co (NASDAQ:GT) achieved a $200 million benefit from the Goodyear Forward Workstream, marking the highest quarterly benefit since the program’s inception.
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The company gained market share in the profitable 18-inch and greater rim size segment, outperforming industry members.
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Goodyear Tire & Rubber Co (NASDAQ:GT) successfully launched new products, including the Goodyear Eagle F1 asymmetric 6, expanding its ultra-high-performance summer tire lineup.
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The company completed significant asset sales, including the OTR business and Dunlop, contributing to deleveraging goals.
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Goodyear Tire & Rubber Co (NASDAQ:GT) is well-positioned in the US market with a strong footprint and plans to increase capacity by 10 million premium tires through factory modernization.
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First quarter sales declined by 6% year-over-year due to lower volume and unfavorable foreign currency translation.
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Gross margin decreased by 70 basis points, and unit volume was down 5%, driven by declines in consumer replacement volume in Asia Pacific and Americas.
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The company faces significant inflation and raw material cost challenges, with a $181 million increase in raw material costs.
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Asia Pacific replacement volume declined due to strategic exits from less profitable markets, impacting overall volume.
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The company anticipates a $300 million annualized cost impact from tariffs on imported raw materials and finished goods.
Q: Can you clarify the price mix in the third and fourth quarters? A: Yes, the price mix is expected to be $150 million year-over-year for each quarter. We’ve seen significant price increases across the competitive set, largely due to tariff exposure. Our own exposure is about a quarter of what others will see, equating to about $4 per tire. (Answered by Christina Zamaro, CFO)
Q: What is the impact of tariffs within the $120 million inflation and other costs for the second quarter? A: Our annual inflation runs about $225 million, with tariffs at $300 million annualized. For Q2, tariffs are close to $50 million, increasing in Q3 and Q4 due to restructuring and factory inefficiencies. (Answered by Christina Zamaro, CFO)
Q: Is there potential for mitigating the $300 million tariff impact over time? A: We are in a strong position with the largest US footprint and are upgrading our facilities to produce high-value tires. We are monitoring the situation closely and working with customers and distributors to mitigate the impact. (Answered by Mark Stewart, CEO)
Q: Can you expand on your second-half volume assumptions? A: We expect recovery in Asia Pacific and growth in EMEA. The US market remains challenging due to inventory dynamics, but we anticipate market share growth from fitment wins in SUVs, light trucks, and EVs. (Answered by Christina Zamaro, CFO)
Q: How do you plan to take advantage of the tariff competitive advantage? A: We are optimizing pricing and profitability while being mindful of consumer value. We are also monitoring inventory levels and adjusting our strategy accordingly. (Answered by Mark Stewart, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.