Goodyear reported results for the second quarter of 2021.
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Goodyear’s second quarter 2021 sales were $4.0 billion, up 86% from a year ago.
The increase was driven by higher volume, the Cooper Tire merger, increased sales from other tire-related businesses and favorable foreign currency translation.
Tire unit volumes totaled 37.5 million, up 84% 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%, reflecting both continuing industry recovery and market share gains.
Original equipment unit volume increased 109%, driven by higher vehicle production and increased market share.
Volume growth also benefited from the Cooper Tire merger, which closed on June 7, 2021.
Goodyear’s second quarter 2021 net income was $67 million (27 cents per share) compared to a net loss of $696 million ($2.97 per share) a year ago.
The 2021 period 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, a negative carryover impact of $27 million related to a winter storm in the U.S., and rationalization charges of $18 million, primarily associated with the closure of a manufacturing facility in Gadsden, Alabama.
Goodyear’s second quarter 2020 net loss 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.
Second quarter 2021 adjusted net income was $79 million (32 cents per share) compared to an adjusted net loss of $437 million ($1.87 per share) in the prior year’s quarter.
Per share amounts are diluted.
The company reported segment operating income of $299 million in the second quarter of 2021, up $730 million from a year ago.
The company also reported merger-adjusted segment operating income of $349 million, which excludes certain costs triggered by the Cooper Tire merger.
The increase in segment operating income primarily reflects the impacts of higher volume, including increased factory utilization, improvements in price/mix, higher earnings from other tire-related businesses and the benefits of cost saving actions.
These factors were partially offset by higher selling, administrative and general expenses (SAG), reflecting the impact of payroll and advertising expenses returning to more normal levels after last year’s COVID-19 response actions, and higher raw material costs.
Segment operating income also benefitted from $69 million related to a Brazilian Supreme Court ruling with respect to indirect taxes, which was partly offset by the adverse carryover effects of a winter storm in the U.S., which are estimated at $24 million.
The reported results also include Cooper Tire operating loss of $16 million, which includes $40 million of amortization of Cooper Tire inventory step-up, $6 million of other transaction-related items, and $4 million incremental amortization of Cooper Tire intangible assets. ■