MIAMI BEACH — “It is widely known that the economic slowdown is having a considerable impact on consumer demand and industry volume,” Darren Wells, Goodyear’s executive vice president and CFO, told attendees at yesterday’s JP Morgan High Yield Conference.
“Fourth quarter industry volumes were well below expected levels, prompting a significant increase to our production cuts that now extend across all business units,” he said.
Wells said Goodyear is responding to the financial downturn with additional cost savings moves and inventory reductions. “We continue to adjust production to reduce inventory levels and to keep pace with the lower demand environment,” he said.
Wells indicated that Goodyear would announce additional cost reduction moves during its Feb. 18 conference call with analysts, which follows the release of its 2008 financial report.
Raw material costs remain a challenge, Wells noted. “Goodyear’s raw material costs were approximately 13 percent higher in 2008 than in 2007, with much of this increase coming in the fourth quarter, which was up more than 25 percent. We anticipate raw material cost increases to peak in the first quarter before beginning to moderate in the second quarter.”
Goodyear estimated that 2008 North American consumer replacement shipments were down some 3.5 percent vs. 2007, with the passenger car/light truck OE market down 22 percent year over year.
On the commercial tire side, Goodyear said replacement shipments were down 11 percent and OE shipments were down about 18.5 percent.
In Europe, Goodyear said, the consumer replacement market was down 6 percent in 2008 compared to 2007, and passenger/light truck OE shipments were down 4.5 percent. In the commercial tire market, replacement shipments were down 13 percent and original equipment shipments were down 2 percent. (Courtesy of Tire Review)
