ARKON, OHIO (Akron Beacon Journal) – Goodyear Tire & Rubber Co. expects to lose $185 million or more for its first quarter, has suspended paying a dividend and plans to restart some of its shuttered tire factories this month.
The tire maker is Danville’s largest employer with about 2,000 workers. They have been idle for weeks since the plant closed in the wake of the coronavirus and decreased market demand.
The Akron tire maker Thursday morning released those details and more in reporting preliminary first quarter results, outlining how it has been impacted by and is dealing with the coronavirus pandemic.
Goodyear said its 2020 first quarter results “were greatly affected by the economic disruption associated with the COVID-19 pandemic.”
The company said it has sufficient liquidity and that the changes it is announcing better position it to deal with the new economic uncertainties.
The temporary suspension of the dividend will save Goodyear about $37 million in cash a quarter, the company said.
The company said it expects to report a loss before taxes of $185 million to $195 million on revenue of $3 billion for the first quarter, which ended March 31. That compares to a loss of $61 million on revenue of $3.6 billion during the same period a year ago. The adjusted 2020 loss is anticipated to be $175 million to $185 million, the company said.
“In the U.S., market conditions remained largely stable and our consumer and commercial replacement businesses delivered strong performances this year, as they benefited from the strength of our brand, new product introductions, and the steps we have taken to align our distribution,” said Richard J. Kramer, chairman, chief executive officer and president. “We also delivered solid consumer replacement growth in both China and Brazil during the second half of the year,” he added.
“We continue to face a challenging global environment, including recessionary demand trends in many international markets. To address these challenges, we remain focused on further improving our cost structure and working capital management, while continuing to build our capabilities to enable mobility, today and in the future,” said Kramer.
Goodyear shares fell 47 cents, or 6.5%, to $6.75. Shares have ranged from a low of $4.09 to a high of $20.70 over the past 52 weeks.
Tire unit volume totaled about 31 million for the first quarter of 2020, down 18% from a year ago. That reflects significant declines in global original equipment shipments after auto manufacturers halted production, plus weak replacement tire demand caused by mandates for people to shelter in place.
The 2019 period included several significant items, most notably discrete tax adjustments of $386 million and rationalization charges of $205 million, primarily related to the previously announced plan to modernize two tire manufacturing facilities in Germany and a plan to curtail production of tires for declining, less profitable segments of the tire market at its Gadsden, Alabama, manufacturing facility, the company said.