Goodyear turnaround continues as money movement lags

DETROIT — Goodyear Tire & Rubber CEO Mark Stewart sits within the automobile bay of a tire store the place the corporate is launching a brand new retail expertise for patrons.

There is a freshly painted black facade on the revamped Detroit retailer, with the phrases “Motor Metropolis” added in white flanking Goodyear’s winged foot emblem. It is dressed up for a non-public occasion tied to a close-by annual automotive pageant referred to as the Woodward Dream Cruise.

However regardless of the fashionable touches, it is nonetheless a tire store. The scent of rubber and oil stays within the air, and the sound of employees altering tires combines with music from a DJ contained in the store’s ready room.

The scene symbolizes Stewart’s ongoing “Goodyear Ahead” turnaround plan. He is attempting to make tires — a traditionally soiled enterprise — extra engaging to buyers and friendlier for customers.

“We have now made a lot progress, and when you consider it from the standpoint of the Goodyear Ahead program, it was actually to get our toes again on the bottom in direction of being the long-lasting firm that we all the time had been,” Stewart, sporting an unbuttoned navy blue Goodyear technician shirt, informed CNBC throughout an interview on the store.

However whereas Goodyear is well-known for burning rubber, it is also burning money because it restructures, tries to refinance, and pays down years of debt.

The corporate’s capital expenditures had been roughly $2 billion mixed in 2024 and 2025, with expectations of $725 million this yr. Its debt remained above $7 billion on the finish of the second quarter.

Goodyear’s web loss was $453 million via the primary half of the yr, whereas its working revenue was $131 million, or a 1.6% margin. 

Beneath the turnaround plan, Stewart wished Goodyear to succeed in a ten% working margin by the tip of final yr. As a substitute, that got here in at 8.5% within the fourth quarter, and it is nonetheless an impressive purpose for the corporate to hit that mark.

“We’re engaged on attending to that double-digit margin, and we’re engaged on meaningfully producing money movement,” Stewart stated. “It has been a very long time since Goodyear’s finished that. That we completely should do.”

The automotive veteran was named CEO of Goodyear after leaving Chrysler mum or dad Stellantis in January 2024. Since then, shares of the corporate have fallen greater than 50% regardless of Goodyear reaching most of the milestones he is got down to accomplish with the plan.

Stewart would not make excuses for lacking the targets, though Goodyear’s enterprise, like many, has been impacted by tariffs, inflated uncooked materials prices, and the growth of cheaper Chinese language merchandise.  

“We nonetheless have numerous geopolitical headwinds that we’re working via … numerous headwinds with uncooked materials indexes and a little bit of the hangover from the tariff surroundings,” he stated, including that abroad producers proceed to have price benefits in comparison with Goodyear.

Goodyear’s uncooked materials prices are anticipated to be roughly flat yr over yr, however a $200 million headwind within the second half, largely as a result of larger commodity prices related to the battle within the Center East, based on the corporate and Wall Avenue analysts.

“Goodyear has confronted many large challenges over the previous few years, starting from slower client (and business) demand, to rising uncooked materials prices, to larger capital expenditures (capex), to low-priced Asian imports (into the U.S.), and, extra not too long ago, to commerce and tariff laws. It hasn’t been simple for Goodyear,” Argus analyst Invoice Selesky stated in an Aug. 17 investor be aware.

Goodyear is rated a maintain with a value goal of $7.60, based on common analyst rankings compiled by FactSet. Its shares closed Friday at $6.35, down 27% this yr.

Much like how Chinese language automakers have grown exterior their very own nation, tire producers have additionally been turning to extra exports, together with the U.S.

“We’re not going to compete in opposition to a $6 or $10 transformed tire. That is not who we’re as Goodyear,” Stewart stated, referring to the manufacturing price required to transform uncooked supplies right into a completed tire.

Regardless of international challenges, Goodyear’s Asia-Pacific area is a brilliant spot for the corporate. Its phase working revenue for the second quarter was $63 million, with an working margin of 12.7%.

Its U.S. operations have been a most important drag on the corporate’s financials. Stewart is attempting to show that round as client demand slows.

The corporate stated its money burn is anticipated to proceed into 2027 however reasonable because the introduced closure subsequent yr of a plant in Fayetteville, North Carolina, is anticipated to enhance its Americas phase working revenue by $270 million yearly.

“We needed to take a really tough resolution, however a obligatory one to announce the closure of our Fayetteville, North Carolina facility. We completely did not take that flippantly, however we simply did not have a pathway to be aggressive out of that facility,” Stewart stated. 

The Goodyear Ahead plan was prompted by activist investor Elliott Funding Administration revealing a stake within the firm in 2023. A spokesperson for Elliott, which supported three new Goodyear board members, declined to touch upon the corporate or the agency’s present possession standing.