Goodyear’s 2026 Q2 Call: Volume Outlook, Raw Materials Headwinds Clash With Pricing Strategy and Recovery Timeline

Date of Call: Aug 6, 2026

Financials Results

• Revenue: $4.3B, down about 5% YOY (down about 1% organically excluding divestitures)
• EPS: Non-GAAP loss of $0.61 per diluted share (includes rationalizations and discrete tax items)
• Gross Margin: Decreased by one percentage point YOY
• Operating Margin: Segment operating income was $36 million (loss of $10M in Americas, loss of $17M in EMEA, $63M in Asia Pacific)

Guidance:

• Q3 global unit volumes on remaining business expected to be roughly flat YOY.
• Q3 non-recurrence of divested businesses reduces SOI by $57M YOY.
• Q3 higher unabsorbed fixed costs of $70M expected.
• Q3 price & mix benefit of ~$110M expected.
• Q3 raw material cost increase of ~$20M expected.
• Q3 Goodyear Forward benefit of ~$70M expected.
• Q3 general inflation cost increase of ~$60M expected.
• Q3 other manufacturing/operating cost increase of $15M expected.
• Q3 tariff headwind reduced to ~$10M.
• Q3 non-operating tax expense expected to be ~$50M.
• Full-year raw materials expected to be neutral; price & mix to contribute >$200M.
• Full-year Goodyear Forward benefits to offset inflation and other cost increases.
• Full-year volume headwind and fixed cost absorption to reduce SOI by ~$350M.
• Full-year tariff impact expected to be ~$50M.
• 2026 expected to be a cash burn year of $200-$300M; Fayetteville closure cash costs ~$100M in 2026.
• 2027 cash burn expected to moderate; Fayetteville benefits ~$250M in 2028.
• 2027 raw material headwind expected to be ~$200M in H2 2026; potential benefit in 2027 from Middle East oil stabilization and oil-linked index resets.

Business Commentary:

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Volume and Market Stability:

• Goodyear's global tire volume increased sequentially in Q2, with more market stability compared to Q1 despite some weak pockets.
• This improvement was due to stabilizing industry demand and the benefits of lapping previous product rationalization actions.

Regional Performance and Challenges:

• The Americas experienced challenging performance due to a competitive marketplace and soft consumer demand, while the Asia Pacific region achieved a 5.3% unit volume increase, driven by improved consumer volume in OE and replacement sectors.
• The Americas' challenges were linked to competitive pressures and soft consumer conditions, whereas Asia Pacific's growth was supported by strong execution in premium segments.

Product Portfolio and Manufacturing Strategy:

• Goodyear is focusing on strengthening its product portfolio by retiring low-margin SKUs and investing in high-value segments like ultra-high-performance tires and larger rim sizes.
• The company is aligning its manufacturing footprint with its portfolio strategy, exemplified by the closure of the Fayetteville facility, which is expected to reduce structural costs and improve competitiveness.

Financial Performance and Outlook:

• Second quarter sales were $4.3 billion, down 5% year-on-year due to lower volume and divestitures, but with improvements in price and mix.
• The company expects roughly flat global unit volumes for Q3, with price and mix benefits offsetting raw material cost increases and unabsorbed fixed costs.

Strategic Initiatives and Cost Management:

• Goodyear continues to implement the Goodyear Forward program, achieving over $1.5 billion in savings, and is focused on modernizing its manufacturing facilities.
• The strategic initiatives are aimed at improving operating discipline, controlling costs, and enhancing flexibility and resilience in the supply chain.

Sentiment Analysis:

Overall Tone: Positive

• Management highlights stabilization and sequential improvement, noting 'the stabilization we're seeing at Goodyear' and 'greater stability we're seeing across the business gives us confidence.' They emphasize strategic progress: 'our priorities are very clear' and 'we're focused on delivering the financial performance expected of an industry leader.' Specific positive data points include Asia Pacific volume up 5.3% and margin expansion, OE volume growth in all regions, and strong execution in portfolio optimization and manufacturing footprint repositioning.

Q&A:

• Question from James Piccariello (BMP Paribas): I want to first ask about replacement versus OE volume expectations for the third quarter... And then just how you're thinking about the fourth quarter within both channels.
  Response: Management expects sequential volume improvement from Q2, with the second half not dependent on a sharp market change. OE growth is strong globally, especially in consumer OE, and commercial OE showed its first volume increase in two years.

• Question from James Piccariello (BMP Paribas): ...can you discuss the major bucketed items for the full year or speaking specifically to the fourth quarter either way, right?
  Response: Full-year SOI expected to be reduced by ~$350M from divestitures and volume/fixed cost headwinds, with price/mix contributing >$200M and tariffs a ~$50M headwind. Q4 volume outlook is roughly flat YOY.

• Question from James Mulholland (Deutsche Bank): ...I was wondering if you could give us a sense as to what moves are next that you and the team are considering.
  Response: Next steps include executing ongoing modernization plans (e.g., Lawton, Napanee, Americana, Dabicha) and evaluating further footprint optimization to align supply with demand and improve competitiveness, following the Fayetteville closure precedent.

• Question from James Mulholland (Deutsche Bank): ...I just want to get your thought on when we might start to see that turnaround [in cash flow].
  Response: 2026 expected to be a cash burn year of $200-$300M, with continued burn into 2027 moderating, and significant benefits from Fayetteville (~$250M in 2028) expected to start flowing through.

• Question from Rajit Gupta (JP Morgan): ...just wanted to understand, you know, some underlying assumptions about what you're seeing on the ground today, maybe in the current spot rate, and how should we think about just the year-on-year headwind into first half next year?
  Response: The $200M raw material headwind for H2 2026 remains unchanged. For 2027, potential benefits from Middle East oil stabilization and oil-linked index resets are noted, but significant uncertainty persists.

• Question from Rajit Gupta (JP Morgan): ...Just wanted to ask another one on just the commercial legal side of things. So, I just wanted to see what are the underlying trends you're seeing in the months of July and August now...
  Response: Commercial fundamentals are improving, with OE up ~100% YOY in June (though from a low base), driven by tight truck capacity and rising freight rates. Replacement demand remains soft but is expected to benefit from manufacturing recovery.

• Question from John Healy (North Coast Research): ...how you view the retail asset. You know, is it something that you feel Goodyear should needs to be in for its kind of long-term success.
  Response: Company-owned U.S. retail is performing brilliantly, providing direct consumer insight. The new Detroit concept store enhances brand engagement. Goodyear is focused on supporting all channels, rationalizing low-end SKUs, and offering a refreshed, complete portfolio to customers amid market consolidation.

• Question from John Healy (North Coast Research): ...When you guys talk about rationalization, does that also include the dollars to kind of reallocate funds? and kind of retool wherever that capacity is going.
  Response: Yes, rationalization savings (e.g., $90M in 2027, $270M annually thereafter) include transition costs like mold CapEx and product recertification for the new facilities.

• Question from Itay Michaelay (TD Cowan): ...how we should think about The impact to overall volume going forward, it does seem like your second half exit rate for volume positions you may be to grow global volume by low single digit next year.
  Response: Portfolio optimization continues with new high-value SKUs (especially 18-inch+ and premium products) launching globally, while low-margin, unprofitable SKUs are rationalized. This strategy aims to grow in attractive segments rather than overall volume.

• Question from Itay Michaelay (TD Cowan): ...curious at a high level how to think about kind of costs into 2027.
  Response: Fayetteville savings are a meaningful structural offset to inflation. Continuous improvement and Goodyear Forward initiatives are embedded company-wide to drive productivity and offset cost pressures, with a focus on modernization and automation.