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Goodyear Tire Company will take cost-saving actions to improve quarterly projections

TOPEKA, Kan. (WIBW) – The Goodyear Tire & Rubber Company announced on Friday that due to several challenges the company faced in the past year, such as cost pressures fueled by inflation; the plant will take some measures to save the plant’s funds.

Goodyear has decided to reduce employees globally by approximately 5%, equal to approximately 500 positions. According to Goodyear chairman, chief executive officer and president Richard J. Kramer, the company’s fourth quarter was “weak.” He noted a 12% decline in the global replacement tire industry in Europe, the Middle East and Africa (EMEA). Goodyear said in a statement that major factors affecting the industry include rising inflation and energy costs.

Goodyear expects the EMEA business unit company to post an operating loss of approximately $80 million in the fourth quarter. This is a significant change as the EMEA sector has reported positive operating income so far since the second quarter of 2020, according to data from Goodyear.

“Our fourth quarter results came in below our expectations given a significantly weaker industrial environment, particularly in Europe,” Kramer said. “Although our businesses have performed strongly despite the volatility of recent years, the uncertain near-term macroeconomic outlook and the continued impacts of inflation make these difficult actions necessary to position our business for future success.”

The company noted that as raw materials and other costs have recently declined, Goodyear also hopes to “boost efficiency” in other inflation-hit areas such as wages and benefits.

Goodyear said the “streamlining and reorganization plan is expected to be completed during the first and second quarters.”

The tire replacement company expects to see pre-tax charges following these actions in the amount of approximately $55 million, primarily related to cash settlement payments expected to be paid during the first 6 months of 2023. it also said it expects the company to achieve a $15 million quarterly benefit early in the second quarter, along with an estimated first-quarter savings amount of approximately $5 million.

Goodyear will release full fourth quarter report and full 2022 financial reports after the market closes on Wednesday, February 8.

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