Sign in
GT

GOODYEAR TIRE & RUBBER CO /OH/ (GT)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 was mixed: revenue was essentially in line with consensus at $4.47B, but adjusted EPS missed materially (−$0.17 vs +$0.14*), and EBITDA underperformed estimates, reflecting raw material headwinds, tariff-driven disruption, and lower volumes . Values retrieved from S&P Global.*
  • Segment operating income fell to $159M (3.6% margin) from $334M (7.3%) YoY, driven by higher raw materials, non-recurrence of 2024 insurance recoveries, and lower volumes; Goodyear Forward delivered $195M of SOI benefits in the quarter .
  • Management flagged ongoing industry turbulence (tariff uncertainty in the U.S./EU, import surges) and now does not expect a recovery in commercial truck until 2026; Q4 raw materials should be favorable and Q4 Goodyear Forward benefits are expected at ~$175M .
  • Balance sheet strengthened by asset sales (OTR $905M proceeds; Dunlop brand $735M), with chemicals sale expected to close late-2025; free cash flow is aided by a $265M add-back from supply/transition agreements at year-end .

What Went Well and What Went Wrong

What Went Well

  • Goodyear Forward delivered $195M in quarterly SOI benefits; management continues to expect exceeding original cost savings and asset sale proceeds targets . “We continue to expect to exceed the original goals for Goodyear Forward both in terms of cost savings and proceeds from asset sales.” — CEO Mark Stewart .
  • Asset sales strengthened the balance sheet: OTR gross cash proceeds $905M (Feb 3, 2025) and Dunlop $735M (May 7, 2025); chemicals sale signed and expected to close late-2025 to further reduce leverage .
  • Premium mix initiatives: growth in 18"+ SKUs in the Americas; Asia Pacific SOI margin up 150 bps after adjusting for OTR divestiture; SG&A down YoY .

What Went Wrong

  • Adjusted EPS (−$0.17) vs prior-year +$0.17 and consensus +$0.14*; EBITDA missed estimates and SOI compressed to 3.6% vs 7.3% YoY due to raw materials, price/mix vs raw materials, non-recurring insurance, and volume declines . Values retrieved from S&P Global.*
  • EMEA posted a segment operating loss (−$25M) amid tariff uncertainty and distributor pre-buy of imports; replacement volumes down 7.3% while OE grew 10.9% (share gains), but costs overwhelmed price/mix .
  • Management cut full-year commercial earnings outlook by ~$135M vs prior forecast; truck volumes 650–700K units lower, with tariff-related cost headwinds (Vietnam JV, Brazil-sourced retread) and factory inefficiencies from very low utilization; recovery not expected until 2026 .

Financial Results

Consolidated KPIs

MetricQ2 2024Q1 2025Q2 2025
Net Sales ($USD Billions)$4.57 $4.25 $4.47
Goodyear Net Income ($USD Millions)$79 $115 $254
Diluted EPS (GAAP) ($USD)$0.28 $0.40 $0.87
Adjusted Net Income (Loss) ($USD Millions)$48 $(11) $(48)
Adjusted Diluted EPS ($USD)$0.17 $(0.04) $(0.17)
Segment Operating Income ($USD Millions)$334 $195 $159
Total Segment Operating Margin (%)7.3% 4.6% 3.6%
Tire Units (Millions)—38.5 37.9

Results vs Estimates and Prior Periods

MetricQ4 2024*Q1 2025Q2 2025
Revenue ($USD Billions)$4.95 (Est: $4.91)*$4.25 (Est: $4.41)* $4.47 (Est: $4.46)*
Adjusted EPS ($USD)$0.39 (Est: $0.31)*$(0.04) (Est: $(0.02))* $(0.17) (Est: $0.14)*
EBITDA ($USD Millions)$255 (Est: $541)*$334 (Est: $393)*$319 (Est: $391)*
Values retrieved from S&P Global.*

Key comparisons:

  • Revenue: Q2 2025 essentially in line vs consensus (slight beat) and down vs Q2 2024 ($4.47B vs $4.57B) . Values retrieved from S&P Global.*
  • Adjusted EPS: Q2 2025 missed materially (−$0.17 vs +$0.14*) and is down YoY (+$0.17 to −$0.17) . Values retrieved from S&P Global.*
  • EBITDA: Q2 2025 missed consensus; Q/Q down from $334M to $319M . Values retrieved from S&P Global.*

Segment Breakdown (Q2 2025 vs Q2 2024)

SegmentTire Units (M) Q2 2024 → Q2 2025Net Sales ($USD Millions) Q2 2024 → Q2 2025SOI ($USD Millions) Q2 2024 → Q2 2025SOI Margin (%) Q2 2024 → Q2 2025
Americas19.6 → 19.1 $2,697 → $2,662 241 → 141 8.9% → 5.3%
EMEA11.6 → 11.3 $1,279 → $1,344 30 → (25) 2.3% → (1.9%)
Asia Pacific8.9 → 7.5 $594 → $459 63 → 43 10.6% → 9.4%

Drivers:

  • Americas: Replacement volumes down; price/mix benefits offset partially; raw materials and inflation weighed on SOI .
  • EMEA: OE up 10.9% with share gains; replacement down due to destocking and import pre-buy; tariff uncertainty; costs overwhelmed price/mix .
  • Asia Pacific: OTR sale reduced volumes/earnings; adjusted for OTR, SOI margin +150 bps .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Commercial earnings outlook ($USD Millions)FY 2025Prior internal forecast (undisclosed)~$135M lower than prior forecast; truck recovery not until 2026 Lowered
Truck volumes (Units)FY 2025 vs prior forecast—650K–700K units lower than prior forecast Lowered
Q4 raw materialsQ4 2025—Favorable in Q4 Positive update
Goodyear Forward benefits ($USD Millions)Q4 2025—~$175M benefit expected New detail
Free Cash Flow add-back ($USD Millions)FY 2025Not contemplated previously$265M add-back to operating cash flow from supply/transition agreements New
Capex ($USD Billions)FY 2025~$1.25 (prior commentary)< $1.0 Lowered
Restructuring cash outlays ($USD Millions)FY 2025 (and 2026 potential)~$400 (announced)Could reach as high as ~$700 across 2025–2026 Potential increase

Notes:

  • Additional tariff-related cost headwinds (Vietnam JV truck tire supply; Brazil-sourced retread) and factory inefficiencies expected given low utilization .
  • EU investigation into Chinese passenger tire imports; potential tariffs 41%–104%, with retroactive registration beginning late July .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q1 2025)Current Period (Q2 2025)Trend
Tariffs/macroU.S./EU import surge pressuring replacement; updated working capital/capex discipline EU investigation (41–104% potential tariffs; retroactive registration); U.S. tariff disruptions; pricing actions in U.S./Canada Elevated uncertainty; potential tailwind if tariffs implemented
Premium >18" SKU strategyLaunch plans for Assurance WeatherReady 2; expanding Eagle F1 SKUs; focus on Tier 1 premium fitments “Grew in >18-inch segments”; 18"+ SKU development/launch timing on track Execution progressing; premium mix rising
Distribution dynamicsATD bankruptcy context; strong validation of TireHub approach Transition of retailers to new distribution; ~95% voluntary switch by July; winding down ATD private label over time Channel transition largely complete
Commercial truckWeakness and import dynamics impacting inventories; volume guidance reductions FY commercial earnings ~−$135M vs prior forecast; recovery not expected until 2026 Weaker near term; extended trough
Raw materialsExpected H1’25 headwind ~$300M (prior view) Q4 favorable; potential 2026 tailwind “couple $100M” baseline at current feedstocks Near-term relief; 2026 tailwind
Asset sales & leverageOTR sale planned; leverage target 2.0x–2.5x by end-2025 OTR closed ($905M); Dunlop closed ($735M); chemicals sale signed; balance sheet to be “very strong” at year-end Deleveraging advancing

Management Commentary

  • “The second quarter proved challenging… driven by industry disruption stemming from shifts in global trade — including a surge of low-cost imports across our key markets.” — CEO Mark Stewart .
  • “We would not expect a recovery for the truck business until 2026… full year commercial earnings about $135M lower than our prior forecast… 650K–700K units less than our prior forecast.” — CFO Christina Zamarro .
  • “Q4 raw materials should be favorable… Goodyear Forward should be a benefit of $175M.” — CFO Christina Zamarro .
  • “We continue to expect to exceed the original goals for Goodyear Forward both in terms of cost savings and proceeds from asset sales.” — CEO Mark Stewart .
  • “As the market stabilizes, we’re going to be able to capitalize on those opportunities [EU tariffs 41–104%].” — CFO Christina Zamarro .

Q&A Highlights

  • Outlook clarity: Q4 drivers include favorable raw materials and ~$175M Goodyear Forward benefits; volume visibility limited due to U.S. market churn; operating cash flow add-back of $265M at year-end from supply/transition agreements .
  • Tariffs & distribution: EU tariff investigation with punitive ranges (41–104%); robust transition away from ATD, with ~95% of retail base migrated; private-label ATD volume to wind down orderly .
  • 2026 bridge: Baseline raw material tailwind of a “couple $100M”; Goodyear Forward ≥$250M benefit; 4% U.S. price increase in May; 1% U.S. price = ~$55M annualized; 1% EMEA price = ~$25M .
  • Cost & capex discipline: 2025 capex reduced below $1B; restructuring cash outflows ~$400M in 2025, potentially up to ~$700M across 2025–2026; focus on manufacturing efficiency and SKU coverage in premium segments .

Estimates Context

MetricQ4 2024 Consensus*Q4 2024 Actual*Q1 2025 Consensus*Q1 2025 ActualQ2 2025 Consensus*Q2 2025 Actual
Revenue ($USD Billions)$4.91*$4.95*$4.41*$4.25 $4.46*$4.47
Primary EPS ($USD)$0.31*$0.39*$(0.02)*$(0.04) $0.14*$(0.17)
EBITDA ($USD Millions)$541*$255*$393*$334*$391*$319*
# of EPS Estimates7*—5*—8*—
Values retrieved from S&P Global.*
  • Q2 2025: revenue slight beat vs consensus; EPS and EBITDA missed; estimate dispersion not shown (EPS estimates count: 8) [GetEstimates]. Values retrieved from S&P Global.*
  • Prior quarters contextualize momentum vs Street: Q1 2025 under on revenue/EPS; Q4 2024 above on EPS and revenue. Values retrieved from S&P Global.*

Financial Results Detail and Drivers

  • Q2 2025 GAAP EPS $0.87, aided by pre-tax gains on asset sales (Dunlop ~$385M); adjusted EPS −$0.17 after backing out significant items (rationalizations, Goodyear Forward costs, asset sale impacts) .
  • SOI walk factors: Goodyear Forward +$195M; inflation/other costs −$127M; unfavorable net price/mix vs raw materials −$83M; non-recurrence of 2024 net insurance recoveries −$63M; lower volume −$37M .
  • SG&A decreased YoY ($692M vs $731M); SOI margin compressed to 3.6% on a lower revenue base and cost headwinds .

Key Takeaways for Investors

  • Near-term risk remains elevated: tariff uncertainty and import pre-buy distort channel inventories; management now sees truck recovery only in 2026, with FY commercial earnings ~$135M below prior plan .
  • Watch Q4 catalysts: raw material tailwinds and ~$175M Goodyear Forward benefits could partially offset inefficiencies from ticket reductions; volume trajectory depends on import slowdown and sell-through data .
  • Balance sheet de-risking is real: OTR and Dunlop proceeds ($905M and $735M) plus chemicals sale support deleveraging; free cash flow aided by $265M supply/transition add-back at year-end .
  • Mix shift execution: expanding >18" premium SKUs and OE share gains in the U.S. and Europe should support price/mix over time; monitor Asia OEM/customer mix and China demand .
  • Pricing levers are meaningful: 1% U.S. consumer replacement price = ~$55M; EMEA 1% = ~$25M; recent 4% U.S. price increase (May) underpins 2026 bridge with raw material tailwinds and Goodyear Forward .
  • EMEA watchlist: tariff investigation (41–104%) could become a tailwind upon implementation, but pre-buy behavior can depress near-term sell-in/sell-out dynamics .
  • Positioning: near-term trading likely sensitive to tariff headlines, raw material trends, and volume visibility; medium-term thesis hinges on transformation execution, premium mix, and deleveraging.