Goodyear Tire to cut 500 jobs given 'significantly weaker' industry backdrop

By Tomi Kilgore

Tire maker warned that fourth-quarter results fell short of expectations, with particular weakness in Europe

Shares of Goodyear Tire & Rubber Co. fell Friday, after the tire maker said it was reducing its salaried workforce by about 5%, as part of a restructuring in response to a "challenging" industry environment and inflation-related cost pressures.

The company also warned that results for its fourth quarter fell short of expectations, given a "significantly weaker" demand, particularly in Europe. The company is scheduled to report results on Feb. 8, after the market closes.

The stock (GT) sank 3.7% to close at $11.10, but pared a loss of as much as 7.5% at its intraday low of $10.66.

The company said the planned rationalization and workforce reorganization will result in the laying off of about 500 employees.

"While our businesses have performed at a high level through the volatility of the past several years, the uncertain near-term macroeconomic outlook and continuing impacts of inflation make these difficult actions necessary to position our business for future success," said Chief Executive Richard Kramer.

Goodyear expects to record restructuring charges of $55 million, due primarily to severance payments, the bulk of which will be paid out during the first half of 2023.

The company said the restructuring will save it about $5 million in the first quarter and about $15 million in the second quarter.

Goodyear is currently expected to report fourth-quarter earnings per share of 19 cents, according to a FactSet survey of analysts, down from 57 cents in the same period a year ago. The FactSet consensus for revenue is $5.23 billion, up from $5.05 billion a year ago.

For the third quarter, the company reported profit and sales that missed expectations, amid a significantly weaker environment in Europe, further increases in inflation and a weak market for replacement tires.

The stock has tumbled 44.3% over the past 12 months.

Among Goodyear's competitors, the U.S.-listed shares of France-based Michelin (Compagnie Générale des Établissements Michelin SA) (ML.FR) have dropped 23.8%, Germany-based Continental AG (CON.XE) have slid 22.2% and Japan-based Bridgestone Corp. (5108.TO) have shed 14.1%.

In comparison, the S&P 500 index has given up 8.2% in the past year.

-Tomi Kilgore

(END) Dow Jones Newswires

01-28-23 1000ET

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