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    GT
    Earnings call· Jun 2026(Q2 FY26)

    GOODYEAR TIRE & RUBBER CO /OH/ Q2 FY26 earnings call GT

    Aug 6, 2026 Source

    Executive summary

    Goodyear Q2 FY26 — Strategic Repositioning and Improved Stability

    Goodyear's Q2 FY26 performance was in line with expectations, showing sequential volume improvement and moderated channel destocking. The company is strategically repositioning its business by optimizing its product portfolio, manufacturing footprint, and go-to-market strategy, exemplified by the Fayetteville plant closure, which is expected to significantly improve Americas SOI by 2028. Management remains focused on delivering stronger financial performance through continuous improvement and disciplined capital allocation.

    Highlights

    5

    • Global tire volumes stepped up sequentially, with Asia Pacific achieving 5.3% volume growth and 330 basis points margin expansion.

    • Increased share of 18-inch and above rim sizes by 4 percentage points year-over-year across Goodyear.

    • Grew OE volumes and market share in all regions during the quarter despite weak consumer OE production.

    • Free cash flow improved by $318 million compared to the prior year, driven by efficient working capital and lower CapEx.

    • Net debt declined over $700 million versus a year ago, reflecting debt repayment and successful issuance of $1 billion in senior notes.

    Concerns

    5

    • Sales were $4.3 billion, down 5% from last year, or 1% organically excluding divestitures.

    • Gross margin decreased by 1 percentage point, primarily due to lower volumes and unfavorable fixed cost absorption.

    • Americas segment operating income was a loss of $10 million, impacted by lower volume, tariff costs, and inflation.

    • Non-GAAP earnings per share was a loss of $0.61 after adjusting for significant items.

    • Raw material costs are expected to increase by approximately $20 million in Q3 FY26 due to higher commodity costs.

    Guidance & targets

    21
    CategoryTargetConfidence
    Americas Segment Operating Income (Fayetteville closure benefit)
    $90 million
    high materiality
    High
    Americas Segment Operating Income (Fayetteville closure benefit)
    $270 million
    high materiality
    High
    Cash costs from Fayetteville closure
    $40 million
    medium materiality
    High
    Cash costs from Fayetteville closure
    $100 million
    medium materiality
    High
    Cash costs from Fayetteville closure
    balance of $200 million total
    medium materiality
    High
    SOI reduction from divested businesses
    $57 million
    medium materiality
    High
    Global unit volumes
    roughly flat
    medium materiality
    Medium
    Higher unabsorbed fixed costs
    $70 million
    medium materiality
    High
    Price and mix benefit
    $110 million
    medium materiality
    High
    Raw material costs increase
    $20 million
    medium materiality
    High
    Goodyear Forward benefits
    $70 million
    medium materiality
    High
    General inflation increase
    $60 million
    medium materiality
    High
    Other costs (transitory manufacturing, operating)
    $15 million
    low materiality
    High
    Tariff-related headwinds
    $10 million
    medium materiality
    High
    Other costs (non-ERT, miscellaneous)
    $20 million
    low materiality
    High
    Tax expense
    $50 million
    medium materiality
    High
    Free Cash Flow
    burn of $200 million to $300 million
    high materiality
    High
    Free Cash Flow
    continued burn, moderating
    high materiality
    Medium
    Full Year SOI
    a touch higher than $600 million
    high materiality
    High
    Raw material headwind
    $200 million
    high materiality
    High
    Raw material outlook
    some benefit
    medium materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Americas
    Unit volume decreased 9%, driven principally by lower U.S. consumer replacement volume and strategic decisions to exit low-margin product lines. Segment operating income was a loss of $10 million, reflecting the impact of lower volume, tariff cost, and inflation, partly offset by price and mix versus raws, and Goodyear Forward savings. Channel destocking improved, with consumer sell-in and sell-out down 1-2%.
    Consumer replacement volume: decreasedU.S. consumer replacement industry sell-in/sell-out: down 1-2%OE volumes: grewCommercial OE volume: grew mid-teens percent
    		—-9%—loss of $10 million
    EMEA
    Unit volume decreased 2%. Consumer replacement volume declined due to soft sell-in conditions. Consumer OE was a continued area of strength, achieving market share growth for the tenth consecutive quarter. Commercial volumes saw improvement in both replacement and OE. Segment operating income was a loss of $17 million, but improved by $20 million when adjusted for the sales of the Dunlop brand.
    Consumer replacement volume: declinedConsumer OE market share growth: 10th consecutive quarter
    		—-2%—loss of $17 million
    Asia Pacific
    Unit volume increased 5.3%, driven by improved consumer volume across both OE and replacement, with notable increases in Japan and China. OE growth stands out against a meaningful decline in the China OE market. Segment operating income increased to $63 million, or 12.7% to sales, expanding 330 basis points compared to the prior year, driven by strong execution in price and mix versus raw materials and focus on the premium segment.
    Segment operating income to sales: 12.7%Segment operating income margin expansion: 330 basis points YoYGreater than 18-inch rim size tires as % of total consumer sales: 500 basis points growth YoY
    		—5.3%—$63 million

    Operational metrics

    21
    Sales
    $4.3 billiondown 5% YoY
    Q2 FY26

    Sales declined due to lower volume and divestitures, partially offset by price and mix improvements.

    Unit volume
    declined 4%YoY
    Q2 FY26

    Decline driven by lower consumer replacement volume in the Americas and EMEA, but showed sequential improvement compared to Q1.

    Segment Operating Income
    $36 million
    Q2 FY26

    Overall segment operating income for the quarter.

    Non-GAAP EPS
    loss of $0.61
    Q2 FY26

    After adjusting for significant items, including rationalizations and discrete tax items.

    Net debt
    declined over $700 millionYoY
    Q2 FY26

    Reflecting debt repayment at the end of last year.

    Senior notes issued
    $1 billion
    Q2 FY26

    Proceeds intended to repay 2027 senior notes, extending debt maturity profile and strengthening liquidity.

    2025 Segment Operating Income (after divestitures)
    $115 million
    FY25

    Baseline SOI after accounting for the sales of the chemicals business and Dunlop brand in the prior year.

    Headwind from lower tire unit volume and factory utilization
    $132 million
    Q2 FY26

    Driven principally by lower consumer replacement volume in the Americas.

    Benefit from price and mix versus raw materials
    $123 million
    Q2 FY26

    Positive contribution to segment operating income.

    Goodyear Forward benefits
    $95 million
    Q2 FY26

    Continuing favorable contributions from the Goodyear Forward program.

    Inflation headwind
    $53 million
    Q2 FY26

    Unfavorable impact from general inflation.

    Tariff headwind
    $32 million
    Q2 FY26

    Impact from tariffs on segment operating income.

    Other operational costs headwind
    $68 million
    Q2 FY26

    Higher other operational costs.

    Foreign currency and other headwind
    $12 million
    Q2 FY26

    Combined headwind from foreign currency effects and other factors.

    18-inch and above rim size mix
    increased 4 percentage pointsYoY
    Q2 FY26

    Matching the fastest pace of expansion since the metric started being disclosed.

    Goodyear Forward savings
    past $1.5 billion
    current

    The program is expected to exceed $1.5 billion in total savings.

    Fayetteville plant peak capacity
    7 million to 8 million units
    historical

    Capacity being taken out by the Fayetteville plant closure.

    Commercial OE shipments
    upfirst time in 2 years
    Q2 FY26

    Indicates improving fundamentals in the commercial market, albeit from a low base.

    Purchasing Manager Index (PMI)
    above 50for the entire year
    FY26

    Indicates acceleration and pickup in the manufacturing sector, supporting freight activity.

    New SKUs and power lines introduced
    40% morethan ever brought forward
    last year

    Part of the strategy to optimize the product portfolio and fill blank spaces in the market with higher-margin products.

    2025 Segment Operating Income (full year)
    $800 million
    FY25

    Starting point for full year SOI after factoring in divestitures from an initial $1 billion.

    Industry KPIs

    7
    MetricValueDetails
    EPSloss of $0.61USD/share
    Revenue$4.3 billionUSD
    Gross margindecreased 1 percentage point%
    Market sharegrew
    Sg a OPEX ratioincreased 1.5%%
    Operating income EBIT$36 millionUSD
    Tariff impact mitigation$32 millionUSD

    Product announcements

    4
    ProductTypeDetails
    Vector All Season 4launch
    Cooper portfolio expansionexpansion
    New Cooper productsroadmap
    New Goodyear productroadmap

    Deals & partnerships

    2
    N/ASale of chemicals business

    Divestiture of the chemicals business occurred last year, impacting the earnings base for comparison.

    N/ASale of Dunlop brand

    Divestiture of the Dunlop brand occurred last year, impacting the earnings base for comparison and EMEA segment performance.

    Risks & headwinds

    6
    Competitive marketplace and soft consumer backdropQ2 FY26

    Americas SOI loss of $10 million

    Mitigation: Strategic repositioning of business, product portfolio optimization, manufacturing footprint improvements, enhanced go-to-market strategy.

    Unusually high tax expenseQ2 FY26, Q3 FY26

    Q3 FY26 tax expense of $50 million

    Mitigation: Not explicitly stated, but driven by regional mix of earnings.

    Raw material cost increasesQ3 FY26, H2 FY26

    $20 million increase in Q3 FY26; $200 million headwind for H2 FY26

    Mitigation: Goodyear Forward benefits, price and mix actions, expectation of some benefit in 2027 from Middle East stabilization.

    Higher unabsorbed fixed costsQ3 FY26

    $70 million in Q3 FY26

    Mitigation: Reflects lower production during Q2; Fayetteville plant closure aims to improve utilization and reduce structural costs long-term.

    Transitory manufacturing expenses and operating costs above general inflationQ3 FY26

    $15 million increase in Q3 FY26

    Mitigation: Continuous improvement mindset and productivity initiatives across the company.

    Commercial market at depressed industry levelsQ2 FY26 and ongoing

    Commercial OE shipments up for first time in 2 years, but on a very low comp

    Mitigation: Focus on improving fleet confidence, leveraging tightening truck capacity and rising freight rates, monitoring PMI for manufacturing pickup.

    What to watch in Q3 FY26

    5

    Americas SOI improvement from Fayetteville closure

    FY27
    CurrentExpected $90 million benefit in FY27
    TargetOn track for $90 million benefit in FY27

    Why it matters

    The Fayetteville plant closure is a significant structural action expected to materially improve Americas segment operating income, crucial for long-term profitability.

    We believe this action will sustainably improve Americas SOI by roughly $90 million in 2027 and about $270 million annually in 2028 and thereafter.

    Q&A highlights

    6

    Can you discuss replacement versus OE volume expectations for Q3, assuming sustained OE growth and less pronounced replacement declines, and how you're thinking about Q4?

    Mark Stewart noted significant sequential volume improvement from Q1 (down 12%) to Q2 (down 4%), with Q2's decline primarily due to low-end SKU rationalization. He stated that channel destocking is largely behind them, and the second half will benefit from easier comps due to SKU rationalization. OE growth, particularly in 18-inch+ premium rim sizes, is strong globally and setting up future replacement sales.

    “In quarter 2, we're down to 4%, right, on that. So meaningful change in terms of the volume there. And 2/3 of that was really around the low-end SKU rationalization. So in terms of -- we've seen meaningful sequential improvement Q1 to Q2. Our outlook for the second half is not dependent on a sharp change in the market.”

    asked by James Picariello · answered by Mark Stewart

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Repositioning and Product Portfolio

    Goodyear is actively repositioning its business by becoming more disciplined about retiring SKUs that do not generate acceptable returns, while investing in products, brands, and innovation that differentiate the company. This strategy focuses on high-value segments such as ultra-high-performance tires and larger rim sizes (18-inch and above). New products, including the Vector All Season 4 in EMEA and expanded Cooper portfolios, are being introduced globally, with further launches planned for the U.S., Canada, and Latin America later this year.

    02

    Manufacturing Footprint Optimization

    The company is aligning its manufacturing footprint with its strategic product portfolio, aiming to efficiently produce products for segments where it can compete most effectively. The decision to close the Fayetteville facility by the end of 2027 is a key step, expected to improve utilization across the network and reduce structural costs in the Americas by $90 million in 2027 and $270 million annually thereafter. Modernization, automation, and digitalization efforts are also underway in other global facilities to enhance flexibility, resilience, and efficiency.

    03

    OE and Replacement Market Strategy

    Goodyear emphasizes its partnerships with Original Equipment (OE) manufacturers, recognizing that OE wins expand brand presence and create a pipeline for future replacement sales. The company grew OE volumes and market share across all regions in Q2, particularly in premium 18-inch and above rim sizes. In the replacement market, Goodyear is strengthening channel partnerships and investing in digital capabilities to improve customer experience and ease of doing business.

    04

    Goodyear Forward Program and Cost Discipline

    The Goodyear Forward program continues to drive operational improvements, with expected savings to exceed $1.5 billion. This initiative has embedded a strong focus on operating discipline and cost management into the company's culture. The ongoing efforts are aimed at offsetting inflationary pressures through productivity gains, continuous improvement, and strategic investments in modernization and automation across manufacturing and supply chain operations.

    05

    Commercial Market Trends and Outlook

    Fundamentals in the commercial market are showing signs of improvement, with commercial OE shipments up for the first time in two years in Q2, albeit from a very low base. Tightening truck capacity, rising freight rates, and the Purchasing Manager Index (PMI) remaining above 50 for the entire year suggest a potential pickup in the manufacturing sector and overall freight activity. While freight volumes are still down year-on-year, these indicators point towards a gradual recovery in the commercial segment.

    AI-generated summary of the company’s earnings call. Not investment advice.