Goodyear reports loss of almost $200m for the first quarter

Akron, Ohio — Goodyear Tire & Rubber Co. has seen its first quarter results “significantly affected” by the spread of Covid-19, the company announced in a 16 April preliminary report.

The Akron-based tire maker reported a 16.6% drop in sales to $3 billion (€2.7 billion) reflecting an 18% drop in total unit volume to 31 million units in the first three months of the year.

The company linked the decline to a significant decrease in global OE shipments as car makers halted production and a weakened demand for replacement tires following global lockdowns in the face of Covid-19. 

Goodyear also reported a loss before income taxes of $185 million to $195 million for the first quarter of 2020, and an adjusted loss before income taxes of $175 million to $185 million. 

That total excludes approximately $10 million of rationalisation and accelerated depreciation charges incurred during the quarter.

The tire maker said the results included a $65 million unfavourable impact driven by “lower factory utilisation and other period costs, both directly related to shutting down its manufacturing facilities.”

The company said it took "swift action" to reduce operating costs and capital expenditures in response to declines in industry volumes.

These included temporarily closure of manufacturing facilities in the Americas and Europe, a move which it said would "reduce conversion costs, improve inventory levels and preserve cash."

Goodyear also reported that it successfully refinanced its $2 billion "primary revolving credit facility" in the US, extending the maturity date to 2025.

"We are pleased to complete this action, particularly given the current economic climate," Darren  Wells, executive VP and chief financial officer, said. 

"The extension of our debt maturities enhances our financial flexibility and further strengthens our liquidity position, allowing us to better manage the challenges we face,” he added.