• Revenue: Fourth quarter sales totaled $4.9 billion, down 3% from last year.
• Unit Volume: Decreased by 4% compared to last year.
• Segment Operating Income (SOI): $385 million for the quarter, with a margin of 7.8%.
• Earnings Per Share (EPS): Adjusted EPS of $0.39 after significant items.
• Free Cash Flow: Exceeded $1 billion in the quarter.
• Net Debt: $6.1 billion at year-end, with net leverage of 3 times.
• America's Segment Operating Income: $262 million, or 9.1% of sales.
• EMEA Unit Volume: Increased by 2% in the fourth quarter.
• Asia Pacific Unit Volume: Decreased by 9% in the fourth quarter.
• Raw Material Costs: Expected increase of approximately $350 million in the first half of 2025.
• Goodyear Forward Benefits: Contributed $195 million against inflation in the quarter.
• Interest Expense Savings: Expected $70 million in annual savings from debt reduction actions.

• Warning! GuruFocus has detected 7 Warning Signs with GT.

Release Date: February 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Goodyear Tire & Rubber Co (NASDAQ:GT) delivered fourth quarter segment operating income ahead of expectations, with strong free cash flow.
• The company successfully executed nearly $500 million of transformation benefits through its Goodyear Forward program.
• Goodyear achieved five consecutive quarters of margin expansion, marking the first year of segment operating income and margin growth since 2015.
• The company completed the divestiture of its off-the-road (OTR) business and announced an agreement to sell the Dunlop brand, aligning with strategic growth plans.
• Goodyear plans to introduce five new product lines in the US, enhancing its portfolio with high-margin SKUs and modernizing its manufacturing capabilities.

Negative Points

• Goodyear faced challenges from low-end imports impacting the consumer replacement industry in the US, Europe, and Brazil.
• The company experienced a 3% decline in fourth quarter sales, driven by lower volume and growth in low-end imports.
• Raw material costs increased, negatively impacting net price mix during the quarter.
• Potential tariff impacts related to Canada and Mexico remain uncertain, posing risks to the company's 2025 plan.
• Goodyear's first half of 2025 is expected to see a decline in segment operating income due to lower volumes and increased raw material costs.

Q & A Highlights

Q: Can you provide an overview of your price mix expectations for the year, particularly in light of raw material headwinds? A: Christina Zamarro, Executive Vice President and CFO, explained that price mix is expected to grow from the first quarter into the second and third quarters, driven by pricing actions and raw material index contracts. Raw material costs are projected to increase by $350 million in the first half, with potential additional headwinds in the second half. Mark Stewart, CEO, added that Goodyear has implemented multiple pricing actions globally to remain competitive.

Q: What are your expectations for volume performance in 2025, and how do you plan to address potential declines? A: Mark Stewart, CEO, stated that Goodyear anticipates global growth in consumer replacement markets, with volatility in the U.S. due to imports. The company expects a flattish first half for consumer OE, with growth in the second half. Goodyear is focusing on expanding its high-end, high-margin product offerings to address volume challenges.

Q: Can you elaborate on the anticipated drivers of improvement in SOI for the second half of 2025? A: Christina Zamarro, CFO, outlined that SOI growth in the second half will be driven by price mix improvements, new product introductions, and moderate volume growth. The company expects to achieve a strong level of underlying growth, with SOI in line with 2024 levels, including insurance proceeds.

Q: How is Goodyear progressing with its Goodyear Forward cost savings program, and what are the key areas of focus? A: Mark Stewart, CEO, highlighted that Goodyear Forward is expected to deliver $750 million in benefits, focusing on manufacturing efficiencies, purchasing cost reductions, and SG&A optimization. The program is embedded in the company's operations and is driving significant improvements.

Q: What is the status of the strategic review of Goodyear's chemicals business? A: Christina Zamarro, CFO, mentioned that the review is ongoing, with interest from both strategic and private equity sectors. The focus has been on other transactions earlier in 2024, but the chemicals business remains under review.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.