Goodyear Q3 2026 Margin Narrows as Volumes and Costs Weigh

Goodyear (GT) reported a third-quarter adjusted loss as weaker tire volumes, underused factory capacity and rising costs compressed profitability, prompting the company to emphasize further structural changes across its operating model, manufacturing footprint and business portfolio.

For the three months ended September 30, 2026, net sales fell 2.3% year over year to $4.54 billion as tire unit volume declined 3.3% to 38.6 million. Segment operating income dropped to $174 million from $287 million, while the segment operating margin contracted 2.4 percentage points to 3.8%. Gross margin narrowed to 15.9% from 18.2%.

Goodyear recorded a GAAP net loss of $238 million, or $0.82 per share, compared with a $2.20 billion loss, or $7.62 per share, a year earlier. The prior-year result included a $674 million goodwill impairment and significant tax expense. On an adjusted basis, the company lost $0.11 per share in the latest quarter, compared with adjusted earnings of $0.28 per share in the third quarter of 2025.

Lower volume and the resulting unabsorbed fixed costs reduced quarterly segment operating income by a combined $77 million. Price and mix exceeded raw-material pressure by $76 million, while Goodyear Forward initiatives contributed a $90 million benefit. Those gains were offset by inflation, tariffs, other costs, foreign currency effects and the year-over-year impact of asset sales.

Americas weakness outweighs Asia Pacific improvement

The Americas remained the largest drag on earnings. Sales declined 2.3% to $2.68 billion, while segment operating income fell by $110 million to $96 million. The segment margin dropped 3.9 percentage points to 3.6%, although tire volume was flat at 19.6 million units.

Goodyear said U.S. replacement-industry sell-in contracted during the quarter. Its Americas replacement volume decreased 2.2%, as stabilization in consumer tires and growth in rim sizes of at least 18 inches were offset by continued pressure in commercial replacement. Original-equipment volume increased 8.7%, with gains in both consumer and commercial OE that the company attributed to market-share growth.

In Europe, the Middle East and Africa, sales fell 3.7% to $1.36 billion and tire volume decreased 6.7% to 11.1 million units. Segment operating income declined by $18 million to $12 million, leaving a margin of 0.9%. Replacement volume fell 11.3% as Goodyear rationalized lower-tier consumer products, while OE volume rose 5.5%. The company said consumer OE achieved an 11th consecutive quarter of market-share gains.

Asia Pacific was the only region to report higher sales and segment earnings. Revenue increased 1.8% to $510 million, and segment operating income rose by $15 million to $66 million. The margin expanded 2.7 percentage points to 12.9%, despite a 6% decline in tire units. Growth in replacement tires with rim sizes of at least 18 inches supported the margin improvement, while lower vehicle production in China weighed on consumer OE demand.

Cash flow remains under pressure

Goodyear used $144 million of cash in operating activities during the quarter, compared with $2 million generated a year earlier. Non-GAAP free cash flow was negative $283 million, deteriorating by $102 million, after $139 million of capital spending.

Total debt stood at $7.37 billion on September 30, down from $8.06 billion a year earlier. Net debt declined by $689 million year over year to $6.56 billion, though it was above the $5.40 billion reported at the end of 2025.

For the first nine months of 2026, sales declined 5.2% to $12.67 billion and tire volume fell 6.3% to 109.1 million units. Segment operating income decreased to $305 million from $641 million, while adjusted loss per share widened to $1.11 from adjusted earnings of $0.08. Nine-month free cash flow remained negative at $1.25 billion, an improvement of $120 million from the prior-year period.

Fourth-quarter assumptions highlight cost headwinds

Goodyear expects fourth-quarter global unit volume to be down slightly from a year earlier but to improve from year-to-date trends, supported by new assortment wins and stabilizing market trends. The company estimates approximately $45 million of unabsorbed overhead associated with third-quarter volume.

Its fourth-quarter assumptions include benefits of about $60 million from price and mix and $110 million from Goodyear Forward. Expected headwinds include roughly $170 million from raw materials, $110 million from inflation and other costs, $44 million related to the Dunlop and Chemical sales, and $56 million from the non-recurrence of 2025 insurance proceeds.

For full-year 2026, Goodyear anticipates approximately $425 million of interest expense, $210 million of rationalization payments, $175 million of cash taxes and $675 million of capital expenditures. Working capital is expected to be approximately neutral.

Management said it is developing the next phase of Goodyear’s transformation while continuing to improve product mix, optimize manufacturing and reduce structural costs. Execution of those initiatives remains subject to weak industry demand and other disclosed risks, including raw-material and energy prices, inflation, tariffs, supply-chain disruptions, labor issues, foreign exchange movements and broader economic uncertainty. The company also noted that its volume assumptions could be affected by conflict in the Middle East.