AKRON, Ohio — Goodyear Tire & Rubber today reported fourth quarter and full year 2008 results and detailed actions to address market challenges in a much weaker economy.
Goodyear’s fourth quarter 2008 sales were $4.1 billion, down from $5.2 billion in the 2007 quarter, despite increases in Goodyear-branded market share. The company’s net loss was $330 million ($1.37 per share), compared with net income of $52 million (23 cents per share) in the 2007 quarter. All per share amounts are diluted.
Goodyear’s sales for 2008 were $19.5 billion, less than 1 percent lower than 2007’s record $19.6 billion. The 2008 sales reflect the $1.3 billion negative impact resulting from an 8.5 percent reduction in tire volume. Also, impacting the change in sales was the 2007 divestiture of the company’s T&WA tire mounting business, which contributed sales of $639 million in 2007. Favorable foreign currency translation positively impacted sales by $383 million.
Goodyear’s net loss of $77 million (32 cents per share) in 2008 compares to 2007 net income of $602 million ($2.65 per share). The 2007 results included an after-tax gain of $508 million ($2.19 per share) on the sale of the company’s former Engineered Products business. All per share amounts are diluted.
"Given lower industry demand, we are taking aggressive action, reducing tire production, cutting costs and adjusting investments to better match market conditions," said Robert Keegan, chairman and chief executive officer.
"The many positive actions we took and the results we achieved in 2008 provide a base from which we will address the market challenges we will inevitably face in 2009," he said.
Keegan announced actions in three key areas to address the economic environment in 2009.
Goodyear has plans for an “unprecedented” number of new product launches in 2009, with more than 50 new tires being introduced globally. Targeted to key segments, these include the new Assurance Fuel Max tire introduced earlier this month in North America and more recently announced as original equipment on the new Chevrolet Volt electric vehicle.
In terms of cost reductions, Goodyear plans to further reduce costs by approximately $700 million in 2009 and based on a four-point cost savings plan target to $2.5 billion. As part of the reductions, Goodyear will eliminate nearly 5,000 jobs, and will freeze salaries in addition to implementing new cost control policies to eliminate non-essential discretionary spending. The company will also take purchasing actions to lower the cost of both raw materials and indirect materials.
In addition, Goodyear plans to eliminate between 15 million and 25 million units of additional manufacturing capacity worldwide over the next two years.
The company plans to implement a number of cash flow actions in 2009, including cutting capital expenditures to between $700 million and $800 million; reducing inventory levels by more than $500 million; and pursuing the sale of non-core assets.
"Collectively, these actions address the new economic realities," said Keegan. "We will remain flexible and are prepared to take additional actions if market conditions warrant. Our goal is to ensure Goodyear is positioned for success when tire markets recover."
