Goodyear Tire Q2 Results Beat View

Goodyear Tire & Rubber Co. (GT) on Friday reported a profit for the second-quarter compared to a loss in the prior year. Quarterly sales rose 86 percent from last year, driven by higher volume, the Cooper Tire merger, increased sales from other tire-related businesses and favorable foreign currency translation. Both adjusted earnings per share and revenue beat analysts’ estimates.

In Friday pre-market trade, GT was trading at $15.64 up $0.38 or 2.49 percent.

Goodyear’s second quarter 2021 net income was $67 million or $0.27 per share compared to a net loss of $696 million or $2.97 per share a year ago.

The latest-quarter result included several significant items, including, on a pre-tax basis, a $117 million benefit related to a Brazilian Supreme Court ruling with respect to indirect taxes, transaction and other expenses of $48 million and amortization of Cooper Tire inventory step-up adjustments of $38 million both in connection with the Cooper Tire merger.

The prior year result included, on a pre-tax basis, a non-cash asset impairment charge of $148 million to reduce the carrying value of an equity interest in TireHub, and rationalization charges of $99 million, primarily associated with the closure of a manufacturing facility in Gadsden, Alabama.

Adjusted net income was $79 million or $0.32 per share compared to an adjusted net loss of $437 million or $1.87 per share in the prior year’s quarter. Analysts polled by Thomson Reuters expected the company to report earnings of $0.14 per share for the second-quarter. Analysts’ estimates typically exclude special items.

Goodyear’s second quarter 2021 sales were $3.98 billion, up 86 percent from $2.14 billion in the prior year. Analysts expected revenues of $3.81 billion for the second-quarter.

Tire unit volumes totaled 37.5 million, up 84 percent from the prior year’s period. The impact of the COVID-19 pandemic on industry demand moderated significantly relative to the prior year.

Replacement tire volume increased 78 percent, reflecting both continuing industry recovery and market share gains. Original equipment unit volume increased 109 percent, driven by higher vehicle production and increased market share. Volume growth also benefited from the Cooper Tire merger, which closed on June 7, 2021.

Americas Business Segment’s second quarter 2021 sales of $2.3 billion were 99 percent higher than in 2020, driven by higher volume, the Cooper Tire merger, and increased sales from other tire-related businesses.

Europe, Middle East and Africa Segment’s second quarter 2021 sales increased 82 percent from last year to $1.2 billion due to higher volume, favorable foreign currency translation and increased sales from other tire-related businesses.

Asia Pacific’s second quarter 2021 sales increased 48 percent to $493 million, driven by higher volume, favorable foreign currency translation, and the Cooper Tire merger.

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