AKON, Ohio _ Goodyear shares sold off sharply Friday after the Akron tire-maker lowered its full-year income expectations and reported second-quarter revenue that came in below expectations.
Goodyear Tire & Rubber Co. reported net income of $147 million, or 58 cents per share, on revenue of $3.7 billion for the second quarter ending June 30. That compares to net income of $202 million, or 75 cents per share, on revenue of $3.9 billion a year ago.
Net income was within analyst expectations but revenue was lower. Goodyear released its results before the stock market opened.
Goodyear said it now expects segment operating income of $1.6 billion and $1.65 billion for fiscal 2017, down 20 to 17.5 percent from previous guidance of $2 billion.
Shares closed down $2.97, or 8.4 percent, to $32.51. Shares are up 5.3 percent since Jan. 1 and are up 20.2 percent from a year ago.
"Our second quarter results reflect the impact of volatile raw material costs and an increasingly challenging competitive environment, particularly in the United States and Europe," Richard J. Kramer, chairman and chief executive officer, said in a news release.
"In addition to higher raw material costs, we have seen a weakening in (original equipment) and consumer replacement demand across many of our key markets during the first half, despite strong underlying industry fundamentals. The combination of these factors has led to a highly unusual first half environment, particularly given the favorable trends in miles driven, gasoline prices and unemployment that are generally supportive of our industry."
Because of that, Goodyear executives now expect lower segment operating income for the rest of the year, Kramer said.
"Despite the near-term challenges, I am no less optimistic about our ability to drive our strategic priorities against the favorable industry megatrends," he said.
Tire sales in North and South America, Goodyear's largest segment, totaled 17.1 million, down from 18.8 million a year ago. Revenue totaled $2.03 billion, down from $2.09 billion, while segment operating income came in at $213 million, down from $291 million for the second quarter of 2016.
Tire sales were also down in Europe, the Middle East and Africa, while flat in Goodyear's Asia Pacific markets compared to a year ago.
