Goodyear (GT) Q3 2026 earnings review
Goodyear sells more premium tires, but weak demand hurts profit
Goodyear's tire factories are still running too slow to cover their fixed costs, even as drivers buy larger, pricier tires. Sales from businesses the tire maker owned a year ago edged up 2%, but total tire volume fell 3% instead of stabilizing as planned. Segment operating income bounced back from a dismal second quarter to $174 million, yet chief executive Mark Stewart admitted results fell short of the company's own expectations.
| Sales from businesses owned a year ago | +1.6% reported sales -2.3% at $4.54B |
|---|---|
| Tire unit volume | 38.6M -3.3% from a year ago (planned: ~0%) |
| Segment operating income | $174M -25% underlying; ~19% below Q2 component plan |
| Loss per share, excluding one-offs | -$0.11 +$0.28 profit a year ago |
⚖️ Verdict: 🔴 Bearish
The story got worse because the third-quarter profit recovery fell $41 million short of what last quarter's component plan pointed to, by our math, and Stewart said incremental fixes are no longer enough. Setting up a new transformation office just three months after announcing the Fayetteville plant closure suggests weak replacement demand and factory overhead pressures in the Americas are deeper than management thought. One bright spot: Asia Pacific expanded its operating margin to nearly 13%, and carmaker tire volumes grew again.
The question now is whether Goodyear needs another round of expensive plant closures to stop burning cash, or if rising sales of 18-inch-and-above tires can refill its factories. If replacement volume stays weak while raw material costs climb, new restructuring bills will eat into cash flow before the 2027 Fayetteville savings arrive. Management's fourth-quarter cost and cash flow outlook on tomorrow's conference call will set the baseline.
🐂 Bull Case
Automaker Share Gains and Big Tires Lift Revenue
Goodyear is shifting its catalog toward larger, more profitable consumer tires of 18 inches and above while winning new contracts with carmakers. Even though total revenue fell 2.3% after the sale of the Dunlop brand and Chemical business, sales from businesses it owned a year ago rose 1.6%. Higher prices and a richer product mix outweighed the drop in tire volumes.
- Large consumer tires (18-inch and above): 44% of sales volumes, up from 39% a year ago
- Americas original equipment (OE) volume, meaning tires sold directly to carmakers: up 8.7% from a year ago
- EMEA (Europe, Middle East and Africa) OE volume: up 5.5%, marking an "11th consecutive quarter of consumer market share gains"
- Price and product mix benefit over raw material costs: $76 million across all segments
Winning business with carmakers matters because drivers usually replace worn factory tires with the same brand two or three years later. However, the $76 million net benefit from prices, product mix and raw materials fell short of the roughly $90 million implied by last quarter's component outlook, by our math.
What to watch: the exact dollar benefit from prices and product mix in the quarterly filing, separated from raw material costs. A reading near last quarter's $110 million target would show that premium tires are pricing through weak demand.
Asia Pacific and Europe Grow Underlying Profit
Outside the Americas, cost cuts and higher-priced tires are lifting profitability despite lower unit sales. Goodyear Forward, the company's two-year cost and asset-sale program, added $90 million to segment profit this quarter, beating the $70 million plan by 29%.
In Asia Pacific, segment operating income rose $15 million from a year ago to $66 million, lifting its operating margin by 2.7 percentage points to 12.9% even as unit volume dropped 6.0%. In EMEA, reported profit fell from $30 million to $12 million after the Dunlop sale, but underlying profit rose $5 million.
What to watch: whether Asia Pacific keeps its segment operating margin above 12% in the fourth quarter when raw material costs rise. Holding that level would show the region's product mix can absorb commodity inflation.
🐻 Bear Case
Operating Profit Missed the Third-Quarter Recovery Plan
"While our third quarter results reflected meaningful sequential earnings improvement, our financial performance remains below our expectations," chief executive Mark Stewart said. Segment operating income, which is profit from the three regional tire divisions before corporate costs, rose from $36 million in the second quarter to $174 million, but dropped 39% from $287 million a year ago.
Strip out the $56 million of profit lost by selling the Dunlop and Chemical businesses, and underlying segment profit still fell $57 million, or 25% by our math. Last quarter's component outlook pointed to about $215 million of segment operating income, so the quarter missed the plan by $41 million.
Cost of goods sold — the direct cost of making tires — rose 2.2 percentage points of revenue to 84.1%, or 1.7 points to 82.4% excluding one-offs. Lower volume cut profit by $77 million, general inflation took $69 million, and tariffs and other costs took $48 million, overwhelming $90 million of Goodyear Forward savings.
What to watch: fourth-quarter segment operating income outlook on tomorrow's conference call. By our math, Goodyear needs $295 million in the fourth quarter to reach its earlier $600 million full-year framework.
Replacement Tire Slump Deepens Factory Cost Drag
Goodyear had planned for third-quarter tire unit volumes to stay roughly even with last year as it lapped earlier product cuts. Instead, total volume fell 3.3% to 38.6 million tires because replacement demand — drivers buying new tires for cars already on the road — weakened across every region.
- Americas replacement volume: down 2.2% from a year ago, keeping total regional volume at 19.6 million units
- EMEA replacement volume: down 11.3% on "consumer market softness and planned SKU rationalization" (dropping less-profitable tire models)
- Asia Pacific replacement volume: down 8.2% on planned model cuts, while carmaker volume fell 3.9% in China
- Americas segment operating income: $96 million, down $76 million excluding the Chemical divestiture
When tire sales fall, factories run below capacity, leaving fewer tires to carry fixed overhead bills. That "factory utilization and cost absorption" drag cut Americas operating margin from 7.5% a year ago to 3.6%.
What to watch: the unabsorbed overhead cost figure for the fourth quarter on the call. A number near the third quarter's $70 million plan would show factories are still running too slow to fix Americas margins before the Fayetteville plant closes in 2027.
Cash Burn Pushes Debt Past $7.3 Billion
Weak operating profit and seasonal working capital needs kept Goodyear burning cash in the third quarter. By our math, subtracting six-month figures from nine-month figures shows third-quarter operating cash flow was negative $144 million and free cash flow was negative $283 million, compared with negative $198 million a year ago.
Through the first nine months of 2026, the tire maker burned $1.25 billion of free cash flow. To fund operations and restructuring, total debt climbed to $7.37 billion from $6.20 billion at the end of 2025, wiping out a chunk of last year's debt paydown from asset sales. The company also recorded $28 million of tax expense despite a $211 million pre-tax loss.
What to watch: whether finance chief Scott Deakin keeps the full-year free cash flow outlook at a $200 million to $300 million burn on the call. Hitting that range requires roughly $1 billion of positive free cash flow in the fourth quarter.
Risks this quarter didn't answer
Four standing concerns from last quarter depend on details that only appear on the conference call or in the quarterly 10-Q filing.
- Fourth-quarter raw material costs: last quarter's outlook implied an $180 million headwind for the fourth quarter; the call will show if oil and commodity moves changed that bill.
- Commercial truck tire demand: the release did not separate truck volumes from consumer tires; the 10-Q will show if the truck trough worsened.
- Cooper Tire intangible assets: $425 million of brand value had zero valuation cushion last quarter; the 10-Q will confirm if falling replacement volumes triggered a write-down.
- Product liability reserves and credit availability: both moved against the company in the first half and require the 10-Q footnotes to check.
👓 Other Themes
New Transformation Office Signals More Restructuring Ahead
Stewart said "as challenging industry conditions persist, incremental improvements alone won't get us to where we need to be." Goodyear set up a "dedicated transformation office to pursue broader operational and strategic opportunities and to drive structural changes that will allow the business to generate more consistent free cash flow." The company booked $148 million of restructuring charges and $71 million of write-offs this quarter, matching the $205–225 million expected for the Fayetteville closure, while gave no new savings targets.
💲 Other KPIs
Combined receivables ($3,081 million) and inventories ($3,748 million) rose $916 million from year-end 2025 as Goodyear stocked up for autumn tire buying, absorbing $870 million of operating cash over nine months. Compared with a year ago, inventories fell 5.2% and receivables dropped 3.0% after divestitures.
By our math, third-quarter spending on factories and equipment fell 24% from $183 million a year ago, down to 3.1% of revenue. Nine-month capital spending dropped 26% to $481 million as the tire maker cut maintenance budgets to match lower factory production.
Diluted shares edged up 0.3% from 288 million a year ago due to employee stock compensation. The US group pays no dividend and bought back no shares over the past year, directing cash toward factory closures and debt.
🔮 Guidance
Unchanged. The third-quarter release gave no new numerical outlook tables, leaving the multi-year Fayetteville plant closure savings from the second-quarter filing as the standing plan. By our math, the $219 million of restructuring and write-off charges booked this quarter tracks the $205–225 million third-quarter charge schedule on the way to $535–565 million in total closure costs by the end of 2027.
❓ Key Questions
What did the fourth-quarter operating profit outlook change to?
Goodyear omitted quarterly outlook numbers from its release. After third-quarter segment profit missed the component plan by $41 million, investors need the fourth-quarter price, volume and raw material buckets on tomorrow's call.
What will the new transformation office cut or sell?
Chief executive Mark Stewart said incremental steps will not suffice and created a transformation office. Management has reversed previous pledges against major new restructurings twice in the past year, so the scope and cash cost matter.
Did large tire volumes grow in absolute units?
Tires of 18 inches and above rose from 39% to 44% of consumer volume, but total unit volume fell 3.3%. Without absolute unit growth, the higher share may partly reflect Goodyear dropping smaller tires.
Can fourth-quarter cash flow still cover the full-year burn plan?
Nine-month free cash flow is negative $1.25 billion. Hitting last quarter's $200–300 million full-year burn target requires around $1 billion of fourth-quarter cash generation on lower operating profits.
What is the status of the permanent finance chief search?
Scott Deakin is hosting his second earnings call as interim chief financial officer while the company launches another transformation phase and carries $7.37 billion in debt.