GOODYEAR TIRE & RUBBER CO /OH/ Q1 FY2025 earnings call

• Goodyear Forward work streams delivered $200 million of benefit in the first quarter, the highest amount realized in any quarter since the program's launch. - Progress on asset sales, with the company positioning its balance sheet for competitiveness. - In the consumer OE business, Goodyear remains well-positioned with wins in luxury, EV, and light truck fitments, and gained OE market share in the U.S. and EMEA. - In consumer replacement, the company gained share in the more profitable 18-inch and greater rim size segment, outperforming industry members. - David Anckaert was assigned as product strategy leader, focusing on new product launches like extending the Goodyear Eagle F1 Asymmetric 6 lineup. - In Asia-Pacific, the company exited less profitable replacement business outside China, with OE volume growing 25%. - The Dunlop sale involves continuing manufacturing/distribution in Europe through end-2023, then supplying under an offtake agreement, and the Chemicals business is under strategic review.

Americas: Unit volume decreased, consumer replacement volume was a factor. Segment operating income was $155 million, 6.2% of sales, a decrease of $24 million compared to the previous year. EMEA: Unit volume decreased 2%, OE volume grew but raw material costs were higher. Segment operating income was a loss of $5 million, a decrease of $13 million compared to the previous year. Asia-Pacific: Unit volume decreased 12% due to replacement volume choices, but OE volume had a 25% growth. Excluding the sale of the OTR business, the region's segment operating income increased slightly and the SOI margin grew nearly 200 basis points.

• Expect to generate at least $2 billion from asset sales as part of Goodyear Forward. - Full-year outlook targets 10% SOI margin and net leverage under 2.5 times by the end of 2025. - Q2 outlook: Global unit volumes expected to decline ~2% due to elevated wholesale channel inventories and lower volume in Asia-Pacific; price/mix expected to be a benefit of about $135 million; raw material costs to increase ~$180 million. - Second half: Price/mix and Goodyear Forward initiatives to support earnings growth, positive free cash flow, and margin expansion.

• Volatility in markets related to U.S. trade policy. - Potential redirection of Asian tires to other markets, impacting EMEA and Asia. - Anticipation of the European Commission making a consumer tire tariff determination on unfair competition in the coming months.

Q: On the tariff impact, the $300 million, and potential mitigation, what's the view?

A: Mark Stewart mentioned continuing to upgrade U.S. facilities for competitiveness, and Christina Zamarro discussed watching the situation month-by-month.

Q: About second half volume assumption, regional view?

A: Christina Zamarro said recovery in Asia-Pacific turning to growth in the second half, EMEA volume strengthening, U.S. having rough sell-through, and Latin America volume tough.

Q: On SKU rationalization in other geographies?

A: Mark Stewart said they are continuing SKU rationalization in Americas and EMEA as part of common platforming.

Q: On tariff redirection impact in EMEA and Asia?

A: Christina Zamarro said in Europe, lower-tier brands like [indiscernible] and Sava are more exposed, with about 12% of 2024 consumer volume in Europe from such brands.

Q: On Corporate/Others guidance variance?

A: Christina Zamarro said variability in Corporate/Others is typical due to incentive compensation accruals based on performance.