Goodyear Tire & Rubber Reports Widened Loss in Q4 as Business in Europe, Middle East, and Africa Struggles
Akron, Ohio-based tire manufacturer, Goodyear Tire & Rubber, has revealed that its loss in the fourth quarter of 2021 increased significantly, primarily due to its struggling business in Europe, the Middle East, and Africa (EMEA). The company reported a loss of $291 million, or $1.02 per share, in the quarter that ended on December 31. This represents a significant jump from the loss of $104 million, or 37 cents per share, recorded during the same period in the previous year. The loss came as a surprise to analysts who were expecting a per-share profit of 28 cents according to a poll by FactSet.
When accounting for certain one-time items, adjusted per-share earnings amounted to 47 cents, beating analysts’ forecast of 36 cents, as reported by FactSet. However, Goodyear’s revenue disappointed, falling by 4.8% to $5.12 billion. Analysts polled by FactSet had expected revenue to reach $5.38 billion. The drop in sales was primarily due to lower replacement volumes and weaker third-party chemical sales. In an investor letter, the company attributed the widening loss to a goodwill impairment charge related to its EMEA business, as well as higher rationalization charges.
The company reported that tire volumes were down approximately 3.8%, while global replacement volumes decreased by 6.7%, largely influenced by the ongoing weak trends in EMEA. Going forward, Goodyear anticipates a 2% decline in global unit volumes for the first quarter. Additionally, the company is projecting a $15 million impact on segment operating income as a result of a fire at its operations in Debica, Poland.
With its business in EMEA proving to be a challenge, Goodyear will need to focus on implementing strategies to overcome these obstacles and improve its financial performance in the coming quarters.
Analyst comment
Negative news: Goodyear Tire & Rubber reports a widened loss in Q4, primarily stemming from struggling business in Europe, the Middle East, and Africa. The company’s loss of $291 million, along with disappointing revenue and lower tire volumes, signals challenges ahead. Goodyear must implement strategies to overcome obstacles and improve financial performance in the coming quarters. Market may react with caution, anticipating the need for a turnaround.
