Published on September 5th, 2016 | by Amirul Mukminin0
Goodyear Reports Strong Net Income for First Half of 2016, Driven by Solid Performance in Asia Pacific
The Goodyear Tire & Rubber Company reported robust results for the second quarter and first half of 2016. The leading tire manufacturer in the world recorded a strong net income of $202 million for second quarter of 2016, and $386 million for first half of the year.
“We delivered higher volumes and solid earnings in the quarter, achieving operating margins above 11 percent in all three business units,” said Richard J. Kramer, chairman and chief executive officer. “Industry fundamentals remain favorable across many of our key markets and demand for our premium, high-value- added tires is strong. Our focus remains on the disciplined execution of our strategy and delivering on our financial targets.”
Goodyear’s second quarter 2016 sales were $3.9 billion, down from $4.2 billion a year ago, with the decrease largely attributable to the deconsolidation of the company’s subsidiary in Venezuela, the sale of the North American motorcycle tire business and unfavorable currency translation. Tire unit volumes totaled 41.5 million, up 2 percent from 2015, driven by growth in the Asia Pacific and Europe, Middle East and Africa regions. Replacement tire shipments were up 4 percent. Original equipment unit volume was down 4 percent.
Goodyear’s sales for the first six months of 2016, on the other hand, were $7.6 billion, down 8 percent from the 2015 period, reflecting unfavorable foreign currency translation of $225 million and the deconsolidation of Venezuela. Tire unit volumes totaled 83.0 million, up 2 percent from 2015, driven by growth in the Asia Pacific region, primarily in Japan and China. Replacement tire shipments were up 3 percent. Original equipment unit volume was down 1 percent. Excluding the impact of the deconsolidation of Venezuela, unit volumes increased 3 percent.
Asia Pacific a Key Contributor to Positive Results
Asia Pacific’s second quarter 2016 sales increased 8 percent from last year to $528 million. Sales reflect a 21 percent increase in tire unit volume, primarily due to growth in Japan and China. This improvement was partially offset by unfavorable foreign currency translation. Replacement tire shipments were up 38 percent. Original equipment unit volume was up 1 percent.
Second quarter 2016 segment operating income of $92 million was up 10 percent from last year and a record, driven by higher volume.
The acquisition of a controlling interest in Nippon Goodyear Ltd. (NGY) in Japan positively impacted volumes by approximately 1.1 million units and sales by $40 million. The NGY acquisition and the sale of the company’s 25 percent interest in Dunlop Goodyear Tires Ltd. had no net impact on segment operating income.