Goodyear (NASDAQ: GT) reported Q2 2026 net sales of $4.25 billion, down 4.8% from $4.47 billion a year earlier, while diluted GAAP EPS swung to a loss of $0.71 from earnings of $0.87. Adjusted net loss widened to $177 million, and total segment operating income fell to $36 million as lower volume, tariffs, other costs and inflation outweighed pricing and restructuring benefits. Tire unit volume declined 4.0%, an improvement from the 12% decline recorded in Q1 as destocking pressure moderated.
Core Earnings Data
For the quarter ended June 30, organic net sales declined 1.4% after excluding the $153 million effect of the Chemical business and Dunlop brand divestitures. The organic decline was attributed to lower tire volume.
The GAAP year-over-year comparison was affected by a $439 million net gain on asset sales in Q2 2025, compared with a $17 million gain this quarter. However, adjusted results also weakened, while selling, administrative and general expense increased to $703 million from $692 million despite lower sales.
| Metric | Q2 2026 | Q2 2025 | YoY change |
|---|---|---|---|
| Net sales | $4.250 billion | $4.465 billion | -4.8% |
| Gross profit / margin | $681 million / approximately 16.0% | $760 million / approximately 17.0% | Profit down approximately 10.4%; margin down 1.0 pp |
| Total segment operating income / margin | $36 million / 0.8% | $159 million / 3.6% | Income down 77.4%; margin down 2.8 pp |
| Goodyear net income (loss) | -$204 million | $254 million | Swung to a loss |
| Diluted GAAP EPS | -$0.71 | $0.87 | Swung to a loss |
| Adjusted net income (loss) | -$177 million | -$48 million | Loss widened by $129 million |
| Adjusted diluted EPS | -$0.61 | -$0.17 | Loss per share widened by $0.44 |
Total segment operating income and adjusted earnings are non-GAAP measures. The Q2 2026 adjusted results excluded rationalization charges, costs associated with a Colombia labor strike, discrete tax items and asset-sale effects.
Business and Segment Performance
Regional performance remained sharply divided. Asia Pacific generated all of Goodyear’s positive segment operating income, while the Americas moved into a loss and EMEA remained unprofitable despite improving year over year.
| Segment | Q2 net sales | Tire units | Segment operating income | Segment operating margin |
|---|---|---|---|---|
| Americas | $2.382 billion (-10.5%) | 17.4 million (-8.7%) | -$10 million vs. $141 million | -0.4% vs. 5.3% |
| EMEA | $1.372 billion (+2.1%) | 11.2 million vs. 11.3 million | -$17 million vs. -$25 million | -1.2% vs. -1.9% |
| Asia Pacific | $496 million (+8.1%) | 7.9 million (+5.3%) | $63 million vs. $43 million | 12.7% vs. 9.4% |
The Americas was the main drag. Replacement tire volume fell 13.0% because of the planned rationalization of lower-tier products, lower North American industry sell-in and increased competition. OE volume rose 8.7% on market-share gains, but it did not offset replacement weakness. Excluding the Chemical business sale, Americas segment operating income declined by $118 million.
EMEA sales increased as price/mix and currency benefits offset lower volume and the effect of the Dunlop brand sale. Replacement volume declined 7.1% amid consumer market softness, competition and lower-tier product rationalization. OE volume rose 8.3%, marking the tenth consecutive quarter of consumer OE market-share gains. Excluding the Dunlop transaction, segment operating income improved by $20 million.
Asia Pacific delivered the clearest improvement. Replacement volume increased 6.4% on higher consumer demand, while OE volume grew 4.2%, led primarily by China and Japan. Higher volume, favorable price/mix relative to raw materials and Goodyear Forward benefits lifted segment operating income.
Replacement Weakness and Cost Pressure Outweighed OE Gains
Goodyear expanded OE volume and market share across regions, but those gains were insufficient to counter weaker replacement demand in its two largest segments. On a divestiture-adjusted basis, total segment operating income declined by $79 million.
The earnings bridge included a $132 million negative impact from lower volume, $100 million from higher tariffs and other costs, and $53 million from inflation. These pressures were partly offset by $123 million of favorable price/mix relative to raw-material costs and $95 million of Goodyear Forward benefits. The result was a substantial margin contraction even though the overall tire-volume decline moderated from Q1.
Cash Outflow Narrowed, but Inventory and Debt Maturities Increased
Cash-flow information was provided for the first six months rather than Q2 alone. Operating cash outflow narrowed to $620 million from $718 million, while capital expenditures decreased to $342 million from $466 million.
Working capital still absorbed significant cash: accounts receivable and inventory each used $340 million during the first half. At June 30, inventory stood at $3.916 billion, up from $3.572 billion at the end of 2025, while accounts receivable increased to $2.728 billion from $2.341 billion.
Cash and cash equivalents rose to $861 million from $801 million at year-end, supported by $1.02 billion of net financing cash inflow during the first half. Long-term debt and finance leases due within one year increased to $1.059 billion from $364 million, while the longer-term portion rose to $5.772 billion from $5.328 billion.
Fayetteville Closure Trades Near-Term Charges for Future Savings
Goodyear plans to close its Fayetteville, North Carolina, facility to align manufacturing capacity with its evolving product portfolio. The action carries substantial restructuring and cash costs before the expected operating-income benefits are realized.
| Metric | Expected amount or timing |
|---|---|
| Americas segment operating income improvement in 2027 | Approximately $90 million |
| Annual segment operating income improvement beginning in 2028 | Approximately $270 million |
| Total pre-tax charges | $535 million to $565 million |
| Cash costs included in total charges | $190 million to $210 million |
| Expected substantial completion | End of 2027 |
Management Perspective
CEO Mark Stewart attributed the quarter’s relative improvements to Asia Pacific and EMEA and emphasized strengthening the product portfolio, building on regional OE growth and optimizing the manufacturing footprint. These priorities reflect the central challenge in the results: OE market-share gains are broad-based, but replacement demand and the Americas cost structure remain significant obstacles to stronger profitability.
Risks Investors Need to Monitor
- Replacement tire weakness: Replacement volume fell 13.0% in the Americas and 7.1% in EMEA. Continued market softness, competition or product rationalization could keep pressure on sales and factory utilization.
- Tariffs and inflation: Higher tariffs and other costs reduced segment operating income by $100 million, while inflation had another $53 million impact. Further pressure could offset pricing and Goodyear Forward savings.
- Restructuring execution: The Fayetteville closure targets meaningful savings, but requires $535 million to $565 million of pre-tax charges and up to $210 million of cash costs before the full benefit is expected.
- Working-capital and financing pressure: First-half operating cash flow remained negative, inventory increased, and debt maturities due within one year rose substantially from year-end.
- Regional profit concentration: Asia Pacific produced $63 million of segment operating income, offsetting losses in both the Americas and EMEA. A slowdown in Asia Pacific would reduce that buffer.
Summary
Goodyear’s Q2 2026 results showed more stable tire demand than in Q1, but lower replacement volume, tariffs and inflation still drove a wider adjusted loss and significant margin contraction. Asia Pacific improved and OE share gains continued across regions, while the Americas remained the principal earnings drag. The next key indicators are replacement-demand stabilization, conversion of Goodyear Forward and manufacturing actions into profit, and the effect of restructuring and working-capital needs on cash flow.
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