Goodyear (GT)’s Turnaround is Still Burning Through Cash, Not Just Rubber

Goodyear Tire & Rubber Company (NASDAQ:GT) is extending the timeline for its turnaround plan, despite key financial targets remaining unmet. CEO Mark Stewart stated that the company aims for a 10% operating margin and meaningful cash flow, but debt remains above $7 billion at the end of the second quarter. Goodyear reported a $453 million net loss in the first half of the year, with only $131 million in operating income and a 1.6% margin.

The company's financial struggles are attributed to tariffs, higher raw material costs, and increased competition from Chinese tire imports. Capital expenditures, which were $2 billion in 2024 and 2025, are expected to drop to $725 million this year as the company focuses on debt paydown and refinancing. Despite the large net loss, Goodyear's core tire business still generates a positive operating margin.

Management has shown capital discipline by cutting planned capital expenditures to $725 million this year from $1 billion annually in 2024 and 2025. However, the extended turnaround timeline raises doubts about hitting new targets, and the heavy debt burden limits investment aggressiveness and reduces leverage. While Goodyear's core tire business remains profitable, the company's debt weighs on overall results.

The turnaround process has taken longer than planned, and while positive operating income and disciplined spending offer a bull case, debt exceeding current earnings power and industry headwinds present a bear case. Goodyear's heavy debt burden and constant weak earnings could keep financial pressure high, even if the turnaround improves the business.