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GOODYEAR TIRE & RUBBER CO /OH/ (GT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025: Net sales $4.25B, GAAP EPS $0.40, Adjusted EPS -$0.04; segment operating income (SOI) $195M and margin 4.6% as higher raw materials offset $200M Goodyear Forward benefits .
  • Versus consensus*: Revenue missed ($4.41B* vs $4.25B), Adjusted EPS missed (-$0.02* vs -$0.04), EBITDA missed ($393M* vs $334M) as raw material headwinds and lower volumes weighed [Values retrieved from S&P Global].
  • Guidance reaffirmed: target 10% SOI margin and net leverage 2.0x–2.5x by Q4’25; Q2 setup: volume -~2%, price/mix +$135M, raw materials +$180M; back-half price/mix +$150M per quarter and potential raw material tailwind in Q4 .
  • Portfolio optimization progressing: OTR divestiture closed ($905M) and Dunlop brand sale completed ($735M), bolstering deleveraging and transformation plan execution .
  • Near-term catalyst: tariff dynamics (Goodyear’s U.S. tariff exposure ~1/4 of industry average; $300M annualized cost headwind largely offset via pricing), EU tariff decision risk/opportunity, and premium SKU ramp and U.S. plant modernization (+10M premium tires in ’25–’26) .

What Went Well and What Went Wrong

What Went Well

  • $200M Goodyear Forward benefits drove the strongest quarterly transformation impact to date; management reaffirmed Q4’25 10% SOI margin and net leverage 2.0x–2.5x targets (“designed to win”) .
  • Strategic actions: OTR sale closed ($905M) and Dunlop brand sale completed ($735M) to reduce leverage and streamline portfolio .
  • U.S. competitive positioning: OE share gains in Americas and EMEA; mix gains in 18"+ rim segment; Goodyear’s U.S. tariff exposure only ~12% of U.S. supply (about one-quarter of industry average), creating relative pricing advantage .

What Went Wrong

  • Net price/mix vs raw materials unfavorable (-$113M), raw materials headwinds ($181M) and lower tire volumes (-$33M) compressed SOI and margins; total SOI fell to $195M (4.6% margin) .
  • Asia Pacific replacement volumes declined (-21% YoY) as the company exited low-margin business and channels destocked; Americas and EMEA also saw top-line pressure from low-end import competition and FX .
  • Cash from operations was seasonally negative (-$538M), reflecting working capital build in receivables and inventories; Q2 outlook calls for ~2% unit volume decline and $20M higher unabsorbed fixed costs due to lower production .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Net Sales ($USD Billions)$4.537 $4.947 $4.253
Goodyear Net Income ($USD Millions)-$57 $76 $115
Diluted EPS - Reported ($)-$0.20 $0.26 $0.40
Adjusted Diluted EPS ($)$0.10 $0.39 -$0.04
Total Segment Operating Income ($USD Millions)$247 $385 $195
Total Segment Operating Margin (%)5.4% 7.8% 4.6%
Return on Net Sales (%)-1.3% 1.5% 2.7%

Segment breakdown (Q1 2024 vs Q1 2025):

SegmentTire Units (M) Q1 2024Tire Units (M) Q1 2025Net Sales ($USD MM) Q1 2024Net Sales ($USD MM) Q1 2025SOI ($USD MM) Q1 2024SOI ($USD MM) Q1 2025SOI Margin (%) Q1 2024SOI Margin (%) Q1 2025
Americas19.0 18.4 $2,588 $2,502 179 155 6.9% 6.2%
EMEA12.5 12.3 $1,347 $1,277 8 -5 0.6% -0.4%
Asia Pacific8.9 7.8 $602 $474 60 45 10.0% 9.5%

KPIs and bridges (Q1 2025):

  • Goodyear Forward benefits: $200M .
  • Raw materials headwind: $181M; price/mix benefit: $68M; net price/mix vs raw materials: -$113M .
  • Volume impact: -$33M; inflation: $56M; unabsorbed fixed costs: -$19M; FX: -$12M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
SOI Margin TargetQ4 202510% 10% reaffirmed Maintained
Net LeverageQ4 20252.0x–2.5x 2.0x–2.5x reaffirmed Maintained
Full-year SOI (incl. insurance context)FY 2025~$1.3B (referenced) “In line with $1.3B” Maintained
Global Unit VolumeQ2 2025N/A~-2% YoY New
Price/MixQ2 2025N/A+$135M New
Raw MaterialsQ2 2025N/A+$180M New
Unabsorbed Fixed CostsQ2 2025N/A+$20M New
Goodyear Forward BenefitsQ2 2025N/A~$190M New
Inflation/Tariffs/OtherQ2 2025N/A+$120M headwind New
FXQ2 2025N/A-$10M New
Other (marketing/misc)Q2 2025N/A-$15M New
Insurance proceedsQ2 2025N/A-$63M non-recurrence New
OTR impactQ2 2025N/A-$23M non-recurrence New
Back-half Price/MixQ3 & Q4 2025N/A+$150M each quarter New
Tariff Cost (annualized)2025N/A~$300M New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Tariffs/macroHighlighted import surge; raw materials projected +$300M in H1’25 Detailed tariff risk incl. Canada/Mexico; SOI first-half decline anticipated U.S. tariff exposure ~12% of GT supply; $300M annualized cost; competitors pricing broadly; advantage vs peers Increasing impact; relative advantage improving
Premium SKU strategyAnnounced WeatherReady 2, Eagle F1 launches; >150 SKUs planned Five U.S. power lines in ’25; broaden large rim coverage Asymmetric 6 expanded to ~250 SKUs; premium mix gains in 18"+ Executing/ramping
Manufacturing modernizationEfficiency/OEE focus; inventory planning Oklahoma modernization adds ~10M premium units in ’25–’26 Ramp continues; transitory costs from facility closures Scaling; short-term cost noise
Regional trendsU.S. low-end import pressure; EMEA destocking; APAC strong margins U.S. OE +20% in Q4; APAC margin 13.5% Americas OE gains; APAC replacement down on exits; EMEA OE share gains Mixed; structurally improving mix
Portfolio optimizationOTR deal signed; divestitures progressing OTR closed; Dunlop agreement signed OTR closed ($905M); Dunlop sale closed ($735M) Completed; deleveraging
Regulatory/legal (EU)N/AEU consumer tire tariff determination anticipated EU tariff decision expected in months Pending; potential positive

Management Commentary

  • “Our team kicked off the year by delivering the strongest quarter to date in benefits from Goodyear Forward… We remain committed to our targets, including segment operating margin of 10 percent and leverage of 2.0x-2.5x in the fourth quarter of this year.” – CEO Mark Stewart .
  • “Under the Dunlop sale agreement… we’ll retain profits during transition through year-end; beginning next year, we’ll supply tires to SRI under an offtake agreement up to 5 years.” – CFO Christina Zamarro .
  • “Goodyear’s U.S. tariff exposure equates to about 1/4 of the average for the industry… annualized cost approximately $300M… price/mix opportunities in back half assumed at ~$150M per quarter.” – CFO Christina Zamarro .
  • “Asia Pacific’s lower volume was largely driven by intentional choices to exit less profitable low-margin replacement business… excluding OTR sale, APAC SOI margin improved ~200 bps.” – CEO Mark Stewart .

Q&A Highlights

  • Tariffs and pricing strategy: Management expects competitor price hikes; GT’s consumer tariff exposure ~$4 per tire vs 3–4x for competitors; announced U.S. price increase of ~4% effective May 1 (worth ~$220M under modeling) with further commercial pricing .
  • Back-half setup: Price/mix expected +$150M in Q3 and +$150M in Q4; Q2 bridge includes price/mix +$135M and raw materials +$180M .
  • Volume trajectory: H2 volume broadly flat with recovery in APAC; continued OE share gains expected to flow to replacement over time; Q2 global units ~-2% YoY given wholesale inventory and APAC drag .
  • Chemicals sale: Process ongoing; asset viewed more valuable amid tariff environment (only major synthetic rubber site supplying U.S. tire makers); focus on maximizing shareholder value .
  • Corporate/other phasing: First-half weighted due to incentive accruals; run-rate lower in H2 .

Estimates Context

MetricQ1 2024Q4 2024Q1 2025
Revenue Consensus Mean ($USD Billions)$4.778*$4.906*$4.410*
Revenue Actual ($USD Billions)$4.537 $4.947 $4.253
Primary EPS Consensus Mean ($)-$0.013*$0.309*-$0.015*
Adjusted Diluted EPS Actual ($)$0.10 $0.39 -$0.04
EBITDA Consensus Mean ($USD Millions)$416.6*$541.0*$393.0*
EBITDA Actual ($USD Millions)$380.0*$255.0*$334.0*
  • Q1 2025: Revenue miss, EPS miss, EBITDA miss versus consensus*. Q4 2024: Revenue and EPS beat; EBITDA below consensus* (insurance proceeds and mix dynamics impacted comparability) [Values retrieved from S&P Global].

Key Takeaways for Investors

  • Transformation is working but Q1 showed cost/volume headwinds: $200M Forward savings were offset by raw materials (+$181M), lower volumes, and FX, compressing SOI to $195M and margin to 4.6% .
  • Relative tariff positioning is a structural advantage: U.S. exposure ~12% of supply (~¼ industry average); $300M annualized tariff/other cost headwind expected to be offset through pricing and mix, with back-half price/mix +$150M per quarter .
  • Near-term setup cautious: Q2 volume -~2%, unabsorbed fixed costs +$20M, raw materials +$180M; expect H2 earnings uplift from price/mix vs raws (+$100M in Q3; +$175M in Q4) and potential raw material tailwind in Q4 .
  • Premium portfolio and capacity ramp are critical drivers: expanded Asymmetric 6 (~250 SKUs), multiple U.S. product launches, and Oklahoma modernization (+10M premium tires) should support mix and margin expansion in H2’25–’26 .
  • Deleveraging visibility: OTR ($905M) and Dunlop ($735M) proceeds reduce net debt; targets reaffirmed for Q4’25 10% SOI margin and 2.0x–2.5x leverage, with Q2’25 use of proceeds toward maturities .
  • Watch EU tariff decision and redirected flows risk: potential EU consumer tire tariff ruling in months; risk of redirected low-end imports pressuring EMEA/APAC; GT’s brand/segment exposure in Europe mitigates but still a headwind .
  • Trading implications: Near-term volatility around Q2 bridge and tariff-driven competitive responses; look for validation of pricing realization and H2 margin ramps; asset sale execution and chemicals update are incremental de-risking catalysts .

Footnote: Values marked with an asterisk (*) are retrieved from S&P Global.