Goodyear Q3 2026 Earnings: Organic Sales Rise as Segment Profit Falls

Goodyear (NASDAQ: GT) reported third-quarter 2026 net sales of $4.54 billion, down 2.3% from $4.65 billion a year earlier, while diluted EPS was a loss of $0.82 versus a loss of $7.62. Organic sales increased 1.6% after excluding divestitures, but segment operating income fell to $174 million from $287 million as lower volume, inflation, tariffs, and factory-utilization pressure outweighed price/mix and Goodyear Forward benefits. Adjusted EPS moved to a $0.11 loss from a $0.28 profit.

Core Performance Data

For the quarter ended September 30, reported revenue was reduced by the divestitures of the Chemical business and Dunlop brand. Excluding those effects, price/mix drove organic growth, partially offset by a 3.3% decline in tire volume to 38.6 million units as replacement-market weakness outweighed higher original equipment, or OE, volume.

Profitability weakened on an underlying basis. After adjusting for divestitures, segment operating income decreased by $57 million as $77 million of lower-volume pressure, $69 million of inflation, and $48 million of tariffs and other costs more than offset $90 million of Goodyear Forward benefits and $76 million from price/mix relative to raw-material costs.

Segment operating income, adjusted earnings, and organic growth are non-GAAP measures. Organic comparisons exclude the direct effects of the Dunlop brand and Chemical business divestitures.

Business and Segment Performance

The Americas remained the largest source of profit pressure, while Asia Pacific was the only segment to report both higher sales and higher segment operating income. EMEA’s reported results declined, although its operating income improved on an organic basis after excluding the Dunlop divestiture.

In the Americas, replacement volume fell 2.2%, while OE volume rose 8.7% on market-share gains. Excluding the Chemical business sale, segment operating income still decreased by $76 million because of factory utilization, inflation, and other costs, partially offset by Goodyear Forward savings.

EMEA replacement volume declined 11.3% because of consumer-market softness and planned SKU rationalization. OE volume increased 5.5%, marking an 11th consecutive quarter of consumer market-share gains. Excluding the Dunlop transaction, segment operating income increased by $5 million as price/mix relative to raw materials and Goodyear Forward benefits offset part of the volume and manufacturing pressure.

Asia Pacific produced the clearest profit improvement. Price/mix lifted sales despite lower volume, and segment operating income rose by $15 million. Replacement volume declined 8.2% due to planned SKU rationalization, while OE volume fell 3.9%, primarily because of China.

Across the company, tires measuring 18 inches and above accounted for 44% of sales volume, up from 39% a year earlier. This shows continued progress toward higher-value consumer tires, although the portfolio shift was not sufficient to prevent the overall margin decline.

GAAP Loss Improvement Masks Weaker Adjusted Earnings

The sharp improvement in Goodyear’s GAAP net loss does not represent a comparable recovery in underlying earnings. The prior-year quarter included a $674 million goodwill impairment and $1.46 billion of tax expense, compared with no goodwill impairment and $28 million of tax expense in Q3 2026. The latest quarter also included $148 million of rationalization charges, up from $21 million a year earlier.

After excluding significant items, Goodyear moved from adjusted net income of $82 million to a $31 million loss. Adjusted gross profit fell to $799 million from $896 million, implying an adjusted gross margin of about 17.6% versus 19.3%. The adjusted figures therefore show that lower volume, weaker cost absorption, inflation, and tariffs materially reduced operating profitability even as price/mix improved.

Profitability, Cash Flow, and the Balance Sheet

Cash-flow figures were provided for the first nine months rather than the third quarter alone. Nine-month operating cash outflow widened to $764 million from $716 million, while capital expenditures declined to $481 million from $649 million. On a simple operating cash flow less capital expenditures basis, free cash outflow was approximately $1.25 billion versus $1.37 billion, meaning the improvement came from lower capital spending rather than stronger operating cash generation.

Cash and cash equivalents were $812 million at September 30, compared with $801 million at the end of 2025. Over the same period, accounts receivable increased to $3.08 billion from $2.34 billion, while inventory rose to $3.75 billion from $3.57 billion, keeping pressure on working capital.

Current and long-term debt and finance leases totaled approximately $7.02 billion, up from $5.69 billion at year-end 2025. The company generated $1.17 billion of financing cash inflow during the first nine months, helping keep cash nearly unchanged despite operating and investing outflows.

Management View

CEO and President Mark Stewart said sequential earnings improved, but financial performance remained below management’s expectations. He pointed to progress in strengthening the product portfolio and optimizing manufacturing operations, while acknowledging that incremental improvements would not be sufficient under persistent industry pressure.

Goodyear has established a dedicated transformation office to evaluate and execute broader operational and strategic initiatives. Its stated objective is to make structural changes that improve returns and produce more consistent free cash flow, making execution and measurable cash-flow improvement important areas to monitor.

Recent Insider Transactions

The supplied insider records showed no insider purchase or sale transactions during the latest six-month period, with total insider holdings of 11.67 million shares. The only supplied record from the past two years with a clearly identified transaction direction and value was an older director purchase.

This transaction predates the latest six-month window and does not by itself establish insiders’ current view of the company’s outlook.

Risks Investors Should Watch

• Replacement-market weakness: Replacement volume fell in every region, including an 11.3% decline in EMEA and an 8.2% decline in Asia Pacific. Continued weakness could pressure revenue, factory utilization, and cost absorption.
• Inflation and tariff exposure: Inflation reduced segment operating income by $69 million, while tariffs and other costs created another $48 million headwind. Price/mix benefits may not consistently offset these pressures.
• Americas margin deterioration: Americas segment operating income fell to $96 million from $206 million, and its margin declined to 3.6% from 7.5%. Restoring utilization and controlling manufacturing costs are central to an overall earnings recovery.
• Cash flow and balance-sheet pressure: Nine-month operating cash outflow widened, working-capital balances increased, and debt and finance leases rose from year-end levels. The transformation program will need to improve operating cash generation rather than rely primarily on lower capital spending or financing.
• Transformation execution: Rationalization charges reached $148 million in the quarter. The new transformation office may create additional structural changes, but the financial benefits and associated costs have not been quantified.

Summary

Goodyear’s Q3 2026 results showed modest organic sales growth and continued gains in OE market share and higher-value tire mix, but those improvements did not offset replacement-market weakness, lower factory utilization, inflation, and tariffs. The much smaller GAAP loss was largely shaped by an easier comparison with prior-year impairment and tax charges, while adjusted earnings and segment margins deteriorated. The main follow-up points are recovery in Americas profitability, stabilization of replacement demand, working-capital discipline, and whether the new transformation effort produces stronger operating cash flow.