Goodyear Tire & Rubber (NASDAQ:GT) reported improved third-quarter operating results but said earnings remained below expectations as weak replacement tire demand and underused factories weighed on profitability.
The company is evaluating broader changes to its manufacturing footprint, product portfolio and capital spending to improve returns and generate consistent free cash flow. CEO and President Mark Stewart said Goodyear has established a dedicated transformation office and expects to provide an update on its next quarterly earnings call.
“We are not basing these plans on a recovery in volume,” Stewart said. He added that previously announced actions are important but would not, on their own, deliver the earnings or cash generation the company believes it can achieve.
Third-Quarter Results and Cash Flow
Third-quarter sales fell about 2% from a year earlier to $4.5 billion, reflecting divestitures of the chemicals business and Dunlop brand as well as slightly lower volumes, Interim Executive Vice President and CFO Scott Deakin said. Excluding the divestitures, organic sales rose about 2%.
Tire unit volume declined about 3%, driven by lower consumer replacement demand in Europe, the Middle East and Africa, or EMEA, and Asia Pacific. Segment operating income was $174 million, up from $36 million in the second quarter and $95 million in the first quarter. The adjusted loss was $0.11 per share.
Deakin said lower factory production contributed to a $61 million headwind from unabsorbed fixed costs. Price and mix added $105 million to segment operating income, while raw materials reduced it by $29 million. Benefits from the company’s Goodyear Forward program contributed $90 million, partly offset by $69 million in manufacturing and administrative inflation.
Free cash flow was a use of $283 million, compared with a use of $181 million a year earlier. Capital spending fell to $139 million from $183 million. For 2026, Goodyear expects to use $300 million to $400 million of cash, including roughly $200 million for restructuring, Deakin said.
Net debt stood at $6.6 billion at quarter-end, down nearly $700 million from a year earlier. Available liquidity was approximately $4.5 billion, including roughly $800 million in cash and available borrowing capacity, according to Deakin.
Regional Performance and Premium Tires
Americas tire volume was flat year over year, as growth in U.S. consumer original-equipment and replacement tires was offset by weakness in commercial replacement. Americas segment operating income fell $110 million to $96 million, or $76 million excluding the impact of the chemicals business sale.
EMEA tire volume fell about 7% amid weaker-than-expected consumer replacement demand and the planned removal of lower-tier products. The region posted segment operating income of 12 million euros. Excluding the Dunlop divestiture, operating income improved organically by 5 million euros, Deakin said.
Asia Pacific volume declined 6%, also reflecting planned product rationalization, but segment operating income rose to $66 million. Its operating margin reached 13%, an increase of 270 basis points from a year earlier.
Stewart pointed to Asia Pacific as an example of the results Goodyear hopes to achieve elsewhere by focusing on premium products and aligning operations with demand. Companywide, tires for rims of 18 inches and above accounted for 44% of the consumer portfolio in the third quarter, up from 39% a year earlier. Those products typically generate higher profit per tire, he said.
Transformation and Outlook
Goodyear is seeking to reduce its sensitivity to volume changes, which can pressure profits when factories run below capacity. Stewart said the company is examining where it competes, what and where it manufactures, and how it deploys capital. He said investors can expect some savings from the transformation work in 2027, with more detail and milestones to come.
Among previously announced actions, Goodyear remains on track to close its Fayetteville, North Carolina, facility by the end of 2027, with expected segment operating income benefits of $270 million by 2028. The company also expects the closure of its two remaining chemical facilities to generate $15 million to $20 million in annual operating income benefits beginning in 2027.
For the fourth quarter, Goodyear expects global tire unit volume to decline modestly year over year. It forecast a $170 million raw-material cost headwind, about $45 million in higher unabsorbed fixed costs and approximately $60 million in favorable price and mix. Goodyear Forward benefits are expected to contribute roughly $110 million.
Deakin said elevated raw-material costs are expected to persist through at least the first half of 2027. The company has not quantified the full financial implications of its transformation plans or provided financial goals, he said.
About Goodyear Tire & Rubber (NASDAQ:GT)
Goodyear Tire & Rubber Company is a global tire manufacturer headquartered in Akron, Ohio. Founded in 1898, the company develops, produces, markets and distributes tires and related products for passenger vehicles, commercial trucks, aircraft, motorcycles, agricultural equipment and off-road vehicles.
Goodyear serves consumer, commercial and original-equipment customers through a portfolio that includes Goodyear and other regional and market-specific brands. Its offerings include replacement tires, tires supplied to vehicle manufacturers, retreading products and related solutions designed to support vehicle performance, safety and efficiency.
In addition to manufacturing, Goodyear operates tire and automotive service locations and provides fleet-management, maintenance and other mobility-related services for commercial customers.
